Oxley turns tables on critics with overseas success in property

Singapore

POLICEMAN-turned-property developer Ching Chiat Kwong of Oxley Holdings believes that his series of failures prior to his big break was what groomed his larger appetite for risk-taking in his business.

And that has borne fruit, going by Oxley's latest financial performance. Amid a broader trend of falling or stagnant profits among local developers, Oxley bucked the trend to report a 114 per cent jump in net profit to S$73.8 million for its fourth quarter ended June 30, 2016.

This was despite a 15 per cent slip in revenue to S$165.1 million. Oxley's 20-per-cent stake in London developer Galliard Group helped to support its bottom line; share of profit from joint ventures and associates quadrupled to S$34.6 million.

For the full year, net profit was up 162 per cent to S$206 million, while revenue surged 40 per cent to S$981.4 million.

In a rare extended interview with The Business Times, Mr Ching describes his vindication: "Compared to other developers, we are sustaining very well. That's why I feel that our decision to go international is the right decision. Finally it's reflected in these results, because we are starting to complete the projects. This week, we have also handed over some units at the Royal Wharf (in London) to buyers."

Asked what is it about Oxley that has allowed it to escape the effects of the slowdown in the domestic property market, Mr Ching said it was the developer's quickness to expand abroad in a bold manner once he spotted home ground weakness.

The current cooling measures in place, as well as market saturation, have made it difficult to sell newly launched hits and chart a growth strategy, he noted. Today, only about 30 per cent of its revenue is derived in Singapore. It has no more development sites here; all its development sites are situated abroad - in London, Dublin, Phnom Penh, Yangon, Batam, and a few Chinese provinces.

"I'd love to be in Singapore definitely ... but the conditions are not there. If the conditions are there, I'd definitely love to come back ... But we are a listed company. Our main trade is development, we have to create revenue, and that's why we go abroad to look for better opportunities."

Mr Ching left the police force in 1993 after completing his study bond because the job did not pay very well, he recalls. He tried his hand in business, going from being a subcontractor doing sewerage washing and water tank cleaning for HDB, to a turfing contractor for football fields, a tour agent, a coffee shop mixed-vegetable rice seller, an otah supplier, a construction builder, and eventually a property developer in 2006.

His break came in 2007 when his bet on "shoebox" condominiums (units smaller than 500 square feet) paid off, starting with the 48-unit Tyrwhitt 139 project which sold within three hours.

But it was not a road without potholes. He took out a mortgage on his home to buy the plot of land, and the night before the launch, the anxiety of losing everything if the project flopped caused him to wake up in the middle of the night and throw up.

Later, the novice developer's shoebox concept was criticised by local property magnate Liew Mun Leong, Surbana Jurong chairman and previously CEO of CapitaLand, for being "almost inhuman".

He faced further reproach from naysayers who baulked at the developer's debt-to-equity ratio of more than six times at one point in 2014, mostly because its overseas projects under construction would not receive cash flow until they were completed.

Mr Ching has been called everything from "gung-ho" to an overly aggressive risk-taker - an image he disputes.

He admits that having a "hunch" about projects before investing is important, but says that he always verifies hunches with due diligence and market study. "I don't take up a job just because I like the place, and gear up and just start to develop."

He is actively taking steps to correct old perceptions. Oxley's net gearing ratio has improved from 3.1 times as at end-June 2015 to 2.8 times at end-June 2016. He expects that gearing will be further reduced in the next fiscal year, as more revenue is recognised on project completions.

Imminent completions include Oxley Tower along Robinson Road, KAP Residences along King Albert Park Road, The Royal Wharf in London, and mixed developments The Bridge and The Peak in Cambodia.

These and other projects add up to an unbilled contract value of S$3 billion. Oxley also has a Novotel and Ibis on Stevens hotel opening in Singapore next year, marking the developer's first foray into hospitality.

Mr Ching says defeat and hardship have given him an understanding of life and sensitivity towards people. They have taught him to respect others, empathise with them, and better understand people's behaviour.

Now, he finds he will value his business partners' concerns above his own, and respect minority shareholders' opinions even though he owns close to 43 per cent of the company.

"I always believe that without setbacks or failures, you cannot learn to persevere ... In fact, I suffered more failures than successes in my earlier years. Nothing I did went well. I met people who didn't pay me; I had to work long hours, go to the fish market at 3am to get the fish for my otah.

"One thing I'm very sure of is that if you are hardworking, there are always opportunities. If you give up, that's it. But if you keep going, one day you will find the opportunity."

His former trials have also given him inner strength, he says. "Because if you are down, there is nothing to push you down further, the only way is up. Now, I just apply humility in whatever I am doing."