Oxley's Q2 profit down 45% on lower revenue, thinner margins

Earnings also hit by fair value loss of S$17m on financial instruments; company proposes one-for-five bonus share issue

Fri, Jan 19, 2018

Lee Meixian


LOWER turnover and thinner margins for projects sold in the second fiscal quarter, coupled with a fair value loss of nearly S$17 million on financial instruments, took a toll on Oxley Holdings' earnings.

For the three months ended Dec 31, 2017, net profit dived 45 per cent to S$68 million, while revenue tumbled 33 per cent to S$406.1 million from the previous year.

Developers' revenues tend to be lumpy due to varying project completion schedules from year to year.

Indeed, the second quarter's revenue came from the handover of completed units in The Royal Wharf Phases 1A and 1B; sold units at mixed residential projects in Singapore, Floraville, Floraview and Floravista; and The Rise @ Oxley Residences, according to the progress made in the construction of these developments.

Rental income from investment properties and service income from hotel operations also contributed to the topline.

In the corresponding year-ago period, however, the first-half revenue was boosted by the completion of Oxley Tower in December 2016, whereas there were no such major project completions in the latest quarter, Oxley said.

Gross profit margin was 17 per cent for the first half of FY18, as compared to 34 per cent for the year-ago period, mostly due to the higher gross margin of the Oxley Tower project versus the lower gross margin of The Royal Wharf project, it added.

Earnings per share dropped to 2.1 Singapore cents, from 3.84 Singapore cents in the year-ago period.

Net asset value per share edged up to 36.16 Singapore cents as at Dec 31, 2017, from 35.71 Singapore cents six months ago.

Oxley has declared an interim dividend of 0.72 Singapore cents per share, compared with 0.5 Singapore cents in the preceding year.

The developer also proposed a bonus issue of new shares on the basis of one bonus share for every five existing shares held.

As at end-December 2017, the group had a total unbilled contract value of S$1.78 billion. In Singapore, all the launched projects are already fully sold, besides T-Space, an industrial space in Tampines, which is two-thirds sold.

"In preparation for the expected next up-cycle in the property market, the group acquired several land parcels at competitive prices in 2017," the developer said.

These include the privatised HUDC estates Rio Casa and Serangoon Ville (in which Oxley holds 35 per cent and 40 per cent stakes, respectively), Vista Park and Mayfair Gardens.

Oxley plans to develop about 3,800 units on these sites, with a total gross development value of about S$5 billion. These projects are scheduled to be launched in 2018.

Oxley Holdings shares ended half a Singapore cent higher at S$0.67 on Thursday.