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Oxley's FY21 results weaker than expected, but FY22 should be better: UOB Kay Hian

Atiqah Mokhtar
Atiqah Mokhtar • 3 min read
Oxley's FY21 results weaker than expected, but FY22 should be better: UOB Kay Hian
UOB Kay Hian has kept its "buy" call for Oxley but with a lower target price.
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UOB Kay Hian analyst Adrian Loh has kept his “buy” call for Oxley Holdings unchanged after the company reported its FY2021 ended June results on August 26.

See: Oxley is back in the black in FY2021 with earnings of $13.1 mil

Noting that Oxley rebounded from a loss in FY2020 to post earnings of $13.1 million for FY2021, Loh highlights that the results were still weaker-than-expected due to one-off items as well as the voluntary administration of an Australian subsidiary.

“Excluding these one-off items, Oxley would have reported a net profit of $137 million,” he comments in an August 31 research note.

Nonetheless, Loh anticipates FY2022 will be a stronger year for the company, given that a number of its Singapore and overseas projects will be completed.

For Singapore, Oxley management has guided that the company will sell out of its current projects in the next six to eight months, which Loh views will underpin its FY2022 revenue and profit. The Singapore market is expected to remain firm, though Loh notes that there may be a policy risk if prices continue to strengthen.

Oxley has four ongoing projects in Singapore which are currently on track and expected to complete on time, despite the current construction labour shortages.

Oxley has also guided it will increasingly focus on developed countries, in particular UK and Ireland, in addition to its home market of Singapore.

In Dublin, Oxley’s mixed-use Connolly Station project has a gross development value (GDV) of $1 billion and is targeted for completion in four to five years.

In the UK, its Deanston Wharf project, in which the company has a 50% stake has a GDV of $675 million and will launch next month in London, Hong Kong and China followed by an October launch date in Singapore. “Given that its Royal Wharf project next door has already sold out, the company sounded very confident that this project would be similarly successful,” Loh remarks.

Loh has upgraded his FY2022 and FY2023 earnings estimates by 18% and 2% respectively to reflect quicker-than-expected completion for Oxley’s Singapore projects as well as potential cashflow from completed projects in Ireland and Cambodia.

However, his target price for Oxley has been trimmed to 28 cents from 37 cents previously, as his valuation is now pegged at a 40% discount to realisable net asset value (RNAV), higher than the 30% discount applied previously. “This discount to RNAV is in line with other property developers under our coverage,” he explains.

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Loh believes that given the strategic move to divest from emerging markets and focus on developed markets, Oxley’s risk-adjusted returns in the long run may “likely contract”, though the way he sees it, it may not be a bad thing.

“Looking ahead, the company appears to be well placed for the next two years to generate steady revenue as project timetables are firmed up post-Covid-19,” he says.

He sees Oxley shares as inexpensive, given that they are currently trading at 4.9 times FY2022 P/E, with a 4.7% yield.

As at 9.59am, shares in Oxley are trading flat at 22 cents.

Photo: Oxley

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