SINGAPORE (Oct 29): Ching Chiat Kwong, executive chairman and largest shareholder of Oxley Holdings, has entered the market again to buy more shares as prices keep trending down after the July round of property cooling measures.
On Oct 19, Ching bought 500,000 shares at 31 cents each, bringing his direct shareholding to nearly 1.67 billion shares. Coupled with another 10.56 million deemed shares, Ching owns 41.49% of the company. On the same day, Eric Low, Oxley deputy CEO, bought 200,000 shares, also at 31 cents apiece, bringing his total stake to 1.12 billion shares, or 27.14%. A day earlier, both Ching and Low had also acquired Oxley shares. Ching snapped up 481,700 shares at 31 cents each, while Low bought 200,000 shares at 31.5 cents each. On Oct 23, Low bought another 200,000 shares at 30.5 cents each.
Year-to-date, Oxley shares have dropped more than 43% to close at 31 cents on Oct 24. At Ching’s most recent purchase price at the same level, Oxley shares are trading at just 4.3 times historical earnings and 0.9 times its book value. For Oxley shareholders, this is unfamiliar territory. All along, the stock has traded above book value, reaching just a shade below two times in January this year. The share price started dipping below book value in mid-July.
Like most property stocks, Oxley shares were hit by the latest round of cooling measures, which took the market by surprise when it was announced on the evening of July 5. Under new rules that took effect on July 6, buyers need to pay an additional buyer’s stamp duty of 12% of a property’s price if it is their second residential property purchase. Previously, a 7% tax was levied. Those buying their third property have to pay 15% ABSD, up from 10% previously.
When Oxley shares fell in July, both Ching and Low had already bought shares. The last purchases made by both men were on July 13. Ching bought 500,000 shares and Low bought 200,000 shares. They paid an average price of 36 cents each for the shares. Oxley’s share price has dipped further since then.
For 4Q ended June 30, the company reported earnings of $138 million, up 209% y-o-y. Revenue in the same period was up 4% y-o-y to $233 million. For the full year ended June 30, Oxley’s earnings increased 23% y-o-y to $282 million. Revenue in the same period declined 11% y-o-y to $1.19 billion.
While the company’s shares are now traded at below book value, its cash flow from operations has decreased and its gearing has increased. Oxley’s cash flow from operations dipped from $461 million for FY2017 to $110 million for the just-ended FY2018. As at June 30, cash and equivalents stood at $255 million, down from $414 million as at June 30, 2017.
Oxley’s net gearing, meanwhile, increased from 1.9 times for FY2017 to 2.2 times for FY2018. For FY2019, the company has total borrowings of $237 million due. For FY2020, a $1.3 billion debt looms.
The company is preparing to quickly sell the handful of projects it has on hand. A series of purchases, whether alone or with joint-venture partners, has made Oxley one of the local developers with a large number of developments in the pipeline to be pushed for sale. Units worth about $3.5 billion are scheduled for sale this year. Projects slated for launch in 2H2018 include Parkwood Residences, Kent Ridge Hill Residences, Mayfair Modern and Ampas Apartment. In addition to the local projects, Oxley has another $3.4 billion worth of overseas projects it wants to launch this year.
