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Broker's Take: UOB Kay Hian resumes 'buy' call on Oxley Holdings
UOB Kay Hian has resumed coverage on property developer Oxley Holdings with a "buy" call, citing Singapore's property upcycle and the firm's sizable landbank.
In a report on Tuesday, UOB noted that Oxley has accumulated the largest residential landbank among listed property stocks in Singapore, comprising of 2,833 units with a gross development value of S$3.03 billion.
The broker also mentioned that Oxley has a diversified earnings base with S$2.46 billion out of S$5.44 billion in secured development sales that have yet to be recognised. These are spread across the UK, Indonesia and China among other countries.
Besides specialising in affordable luxury residential developments, Oxley is also branching out into commercial and industrial developments.
"Oxley has been growing its recurring income stream from its investment and hospitality properties, which is expected to grow from S$11.3 million in FY17 to S$167.1 million in FY21," the research note stated.
Lastly, UOB expects Oxley's gearing concerns to subside as debt is paid down with the completion of development projects. It noted that the firm's net gearing ratio decreased steadily from a high of 6.4x in FY12 to 1.9x in FY17, yielding positive operating cash flow for the first time in recent years.
UOB valued Oxley at a target price of S$0.67, a 19.6 per cent upside compared to the stock's last traded price of S$0.56.