SGD New Issue Review : Oxley 2Y 5.25%


–  New Oxley Mtn Pte Ltd SGD 2yrs announced on the back of reverse interests
–  Initial price guidance: 5.25% area
–  Issue size: TBD
–  Timing: This week’s business, as early as today

Oxley 5.1% 12/16: 100.15, 5.02%
Oxley 5.1% 05/17: 100.00, 5.15%

Credit Highlights

– Oxley Holding Limited (“OHL”) is a developer of residential, commercial and industrial projects and is listed on SGX-ST with a market capitalisation of about S$1.6 billion
– OHL has property development projects in Singapore, United Kingdom, Malaysia, China and Cambodia.
– OHL’s strengths include the ability to meet the changing needs of home buyers, ability to complete development projects within relatively short periods, focus on its core strength of property development, experienced and committed management team and established business relationships and extensive networks.

I am biased against Oxley and its not just about its astronomical leverage levels of 9.4 times which is more than double of Olam and all the highly geared commodity trading companies.

Just take a look at their share capital chart.

oxley share capital

Their share capital back in 2008 was 1 mio.

Current market cap = $ 1.651 bio.

Debt/Equity is 558% at the last count, higher than Dec 2013 level, which is not quite as high as levels of 1800% back in 2010, during the real estate bull market. [Capitaland Debt/Equity is 78%]

Oxley Debt/Equity %

Oxley Debt/Equity %


But they are working very hard because I notice about half a dozen SMS’s per month advertising Cambodian real estate. And yes, I know $160k is not alot but it would take the average Cambodian about 100 years to pay it off if they are earning the projected 2019 GDP per capita of $1593 (World Bank has it at an unthinkable $709 per annum at 2005 prices).

And they are building a hotel there too.

Not all their pursuits have been fruitful as their KL deal fell through when the Malaysian government pulled the plug on them .

“July 14 (Straits Times) — SINGAPORE – Oxley Holdings’ bid to buy and build a mixed development on a prime site in Kuala Lumpur has fallen through……………..     It is not known why the Malaysian government changed its mind.”

Although their recent earnings have been lacklustre, plunging 74% in the last quarter, they managed to pull the stunt of moving units against the odds in the poor investment climate etc.

Thus their profits for the quarter till Jun 2014 was $9.8 mio vs their annual interest expense of $ 40.8 mio. Hopefully, an anomaly.

5.25% is too low for what I consider a high yield name that is comparable to some of those B rated Chinese real estate developers out there. Granted that its owners are now on the Forbes list and they look like they are in the business to stay after climbing from 1 mio to 1.6 bio, I will still steer clear of bonds and equity because the real estate business will not be in favour for a while to come as the industry continues to consolidate.