Oxley

Oxley’s 1QFY15 results missed expectations by a wide margin, forming only 7% of full year FY15 Bloomberg estimates. Profits crashed 96% y/y to $10.1m as revenue plunged 82% to $120.3m and GPM dropped 14.4ppt to 33.5%. Of the 11 projects (all Singapore) that contributed to revenue and gross profit, 7 are fully sold, three are mostly sold (84%/96%/99%) but FloraV, a freehold development, is only 32% sold. Operating expenses ballooned 42% to $14.5m mainly due to more aggressive advertising amidst the soft residential property market and higher finance costs due to increases in interest on MTN and bank loans. Otherwise, absence of $15.8m provision for CEO’s incentive bonus is partially offset by offset by $10.2m increase in FX adjustment losses. A one-off $6.7m unrealized fair value adjustment gain helped to lift bottom line. Oxley’s main disadvantage lies in its high dependence on Singapore property market. Of the 30 projects launched in 2014 and contributing to revenue, 28 are in Singapore. Management expects the cumulative impact of various property cooling measures in Singapore as well as the general health of Singapore’s economy to significantly impact Oxley’s results in FY15. Lastly, we again want to highlight that the high net gearing of 3.9x as of Sep14, despite a slight improvement from 4.1x in Jun14, is still a nagging concern. The saving grace is that the company is consistently capable of generating positive operating cashflow. Oxley trades at 3.6x P/BV and 38.12x annualized 1QFY15 P/E.