SINGAPORE (Dec 18): RHB Group Research is reiterating its “buy” recommendation on Oxley Holdings, after the property developer on Dec 16 announced it is divesting its leasehold interest of 297 years in No. 3 Dublin Landings for 115.0 million euros ($173.7 million).

The brokerage is also maintaining its target price of 43 cents, implying a potential upside of 21% and close to 9% yield.

Oxley is entitled to receive 77.8% of the sale price of the property. In a regulatory filing, the group says the proceeds from the sale will contribute positively to its cash flow.

See: Oxley divests Dublin property for $174 mil; embarks on new development at Connolly Station

“We expect much stronger quarters ahead, due to the recognition of the remaining Chevron House sales as well as its Dublin and Singapore projects,” says analyst Jarick Seet in a Dec 18 report.

No. 3 Dublin Landings is the last of the five commercial buildings that Oxley developed at the new commercial centre in the heart of the Irish capital to be sold.

In addition to the commercial space, the group developed 298 residential apartments, which have been sold and are to be delivered progressively from November 2019 to June 2020.

Total consideration from the development and sale of the commercial and residential developments is 745.4 million euros, with Oxley entitled to receive 591.5 million euros.

Back home, Seet notes that Oxley’s Singapore portfolio has also been selling well. As at 3QFY2019, nearly two-thirds of its Singapore portfolio has been sold, the analyst says.

“Management has also noticed that the property market has picked up and is more positive on the Singapore property market for 2020,” Seet adds. “Oxley has raised prices in a few of its existing projects by 1-2% due to new launches around the same area likely to be selling at much higher prices.”

With the cash starting to flow again, the analyst believes the group could potentially pay out special dividends to shareholders – making Oxley an even more compelling “buy”.

“Management guided that excess cash – after paring down gearing – will be used to reward shareholders with special dividends if there are no other suitable opportunities at that time,” Seet says.

In addition, he points out that the counter is trading at a “deep 52% discount” to it revalued net asset value (RNAV) of 74 cents.

At at 3.21pm, shares in Oxley are trading half a cent higher, or up 1.4%, at 35.5 cents.

According to RHB valuations, this implies an estimated recurring price-to-earnings (P/E) ratio of 3.9 times, a price-to-book value (P/BV) of 0.8 times, and a dividend yield of 8.5% for FY2020F.