SINGAPORE (Sept 24): Oxley Holdings might have seen its full year earnings nearly halved year-on-year to $146.3 million for FY19. But some market watchers believe the property group is poised for a stellar year ahead.

“FY20 should be a record year, with profits from the Chevron House sale, Dublin landing and Cambodia coming in,” says RHB Group Research lead analyst Jarick Seet in a Tuesday report.

In addition, the analyst notes that Oxley has hinted that it may pay a special dividend for its 10-year anniversary.

“Management guided that excess cash – after paring down gearing – will be used to reward shareholders with special dividends, if there are no suitable opportunities at that time,” Seet says. He estimates this special dividends to be around 3 cents per share.

Oxley has been slowly paring down its debt, which currently amounts to some $2.18 billion expiring by 2020.

Seet notes that the majority of Oxley’s debt comprise property loans, which “can easily be refinanced”. “Only SG$450 million of its retail bond need to be paid by 2020,” he adds.

The $1.03 billion sale of Chevron House saw the group pocket $210 million, while it also has some €358.6 million ($543.2 million) coming in 2020 from the Dublin project as well as another US$204 million from its development in Cambodia.

“Gearing has been lowered to 2.05 from 2.17, and should be significantly lowered further in FY20F,” Seet says.

He also points out that Oxley still has some $2.7 billion worth of locally-sold residential units set to be booked into its coffers, and another more than $900 million from the potential value-unlocking of the Stevens Road hotels.

Oxley saw its earnings fall to $146.3 million for FY19, just over half of FY18 earnings of $285.0 million.

In the 4Q19 ended June, earnings plunged 81% to $25.6 million, as revenue fell 57% to $100.4 million on lower revenue contribution from its project in the United Kingdom.

“The counter is trading at a deep 58% discount to our RNAV of 74 cents. We believe that this is an attractive price level – close to its 5-year low – as investor sentiment was impacted by property sector cooling measures, as well as the misconception over its ability to repay debts,” Seet explains.

RHB is keeping its “buy” call on Oxley and raising its target price by 4.9% to 43 cents. This implies an upside of 41% and a dividend yield of 9.8% for FY20F.

As at 11.56am on Tuesday, shares in Oxley are trading half a cent higher, or up 1.6%, at 31 cents.