- Oxley’s loss in the 1H24 was not unexpected. The Group reported a loss of SGD 10.4m in 1H24, as compared to the profit of SGD 2.2m in 1H23. The lack of new launches from the previous reporting period had suggested a lower revenue, which was ultimately reflected in its 1H24 results. While Oxley managed to reduce a fair amount of expenses (particularly finance cost that was reduced by 29%, around SGD 20m), Oxley experienced a loss in 1H24 primarily due to a lower gross profit (1H24: SGD 43.3m vs 1H24: SGD 65.8m).
- Oxley’s performance will greatly depend on sales of its ongoing projects. For Oxley to become profitable again, it has to improve the sales of the ongoing projects – as its major upcoming project (Dublin Arch in UK) will only launch in 4Q24. With that said, given the current market conditions where Oxley is experiencing slower sales, it appears quite unlikely for Oxley to return to profit soon.
- The Group’s cash and cash equivalent fell from SGD 125m as of 1H23, to SGD 49m as of 1H24. A large reason for the drop in its cash position was due to Oxley paying off its debt by SGD 289m, after accounting for proceeds from new borrowings. That said, operating cashflow remained strong in 1H24 owing to the cashflow from sold development properties, while at the same time, seeing higher cashflow from investing activities (1H24: SGD 116m vs 1H24: SGD 43m).
- Oxley’s debt profile and ratios improved after paying off debts. Net borrowings fell 14% from SGD 1,518m as of 30 June 2023 to SGD 1,311m as of 31 December 2023. We see a reduction of overall secured borrowings (1H23: SGD 1,344m to 1H24: SGD 1,164m). As a result, we see an improvement in its net gearing ratio – from 1.62x as of 30 June 2023 to 1.44x as of 31 December 2023. Since FY23, Oxley has continued to pare down its debt where possible, which helps with the overall credit profile.
- There remains some upcoming cashflow, but relatively limited as compared to FY23. Oxley’s future progress billings are now estimated at SGD 393m, with billings of projects in Singapore almost fully recognized. Of its launched overseas projects, Oxley expects a gross development value of SGD 732m. With Riverscape (UK) and Oxley Towers KLCC (Malaysia) expected to attain TOP in 2024, we expect Oxley to receive a large part of existing future progress billings this year.
- Overall, credit profile for Oxley remains risky in the foreseeable future, which we believe is riskier than most high-yield issuers in Singapore. Its credit risk, including default risk, has risen from the previous reporting period but we believe a default remains unlikely given the projected cashflow. A key concern is the lack of immediate liquidity, but we believe Oxley is currently in a better position to seek more secured borrowings if necessary – after paring down a large majority of its debt. For OHLSP 6.900% 08Jul2024 Corp (SGD) that is maturing in 0.4 years, cashflow from future progress billings (and ideally, further sales of ongoing projects) should allow Oxley to redeem the SGD 195m outstanding amount.
- For bondholders, investors of greater risk tolerance may continue holding on to the paper to maturity. For investors of a lower risk appetite, we would prefer issuers with a stable earnings outlook and of better credit profile – such as TMGSP 5.500% 31May2028 Corp (SGD).
Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) hold a position in OHLSP 6.900% 08Jul2024 Corp (SGD) and TMGSP 5.500% 31May2028 Corp (SGD), and the analyst who produced this report hold a NIL position in the abovementioned securities.
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