Oxley

Oxley: Oxley 4QFY14 net profit collapsed 74% y/y to $9.8m, impacted by a 226% spike in finance cost of $11.3m from higher interest costs of medium term notes. Revenue tumbled 70% to $82.9m as a result of lower revenue recognition from the construction of 12 mixed-residential projects. This brought full year earnings to $286.7m (+315%) and revenue to $1,074.1m (+135%), missing estimates by 5% and 15% respectively. Management cut final DPS to 0.18¢ (FY13: 0.6¢). Developments for the group remains exciting with its foray into overseas markets in UK, China, Cambodia and Malaysia, supported by strong earnings visibility with pre-sales revenue of $2.6b from its Singapore projects and $1b from overseas projects to be progressively recognized over the next 2-3 years. However, investors should be mindful of its highly geared balance sheet, with net gearing of 4.1x as of 30 Jun '14, compared to other SGX-listed property developers Wing Tai (0.5x), Ho Bee (0.2x), Roxy Pacific (2.7x), Chip Eng Seng (1.5x) and Hiap Hoe (0.9x). Hence, we do not rule out the possibility of an equity raising in the near term. At $0.695, Oxley is valued at 5x P/B and trades at a 39% discount to RNAV of $1.14.