Oxley Holdings Ltd – USD bond idea: OHLSP 6.375% 21Apr2021 Corp (USD) July 17, 2020 493

  • The Oxley 6.375% USD bond has been on our radar for awhile for its compelling value. At the current price of 95.3, it offers an SGD swap implied yield to maturity of 12.51% with a tenor of less than 10 months (maturity date on 21 April 2021). Upon Oxley’s recent company update on 9 July 2020, we provide some colour on the company’s performance and its debt repayment ability, and why we believe Oxley’s cash flows looks adequate to redeem the bond.

 

CREDIT VIEW

+ Strong cash flow visibility despite construction delays. The group’s construction projects in Singapore have been halted since April due to COVID-19 measures, and may resume end July subjected to regulatory approval. Consequently, TOP dates have been delayed.

 

+ Cash and cash equivalents available as at 31 December 2019: S$324mn

 

+ Cash flows expected in 2020

The group’s Singapore projects expected to be completed and revenues recognised in 2020 include The Verandah (S$15mn) and Sea Pavilion Residences (S$16mn), and similarly for overseas projects include Royal Wharf (S$345mn), Dublin Landings (S$116mn), The Bridge (S$5mn) and The Palms (S$24mn), bringing the total revenues due for recognition in 2020 to S$521mn. In addition to the cash flows from project completions, Oxley also received cash flows of S$206mn from its successful divestment of Chevron House announced on 22 June 2020, and GBP30mn (S$53mn) from a sale of its 20% stake in Galliard Group. Total expected cash inflows in 2020 amount to approximately S$780mn.

 

+ Cash flows expected in 2021

Singapore projects due to TOP in 2021 include 1953 (S$43mn), The Verandah (S$150mn), and Sixteen35 Residences (S$34mn), while overseas projects include The Peak (S$213mn), bringing expected 2021 total project development revenue recognition to S$440mn.

 

Debt maturity schedule

 

Comments

With a debt maturity schedule of S$499mn (321+178) in 2020 and S$711mn (480+80+151) in 2021 totalling S$1,210, and cash flow visibility of S$1,104mn (324+780) in 2020 and S$440mn in 2021 totalling S$1,544mn, we believe Oxley has adequate liquidity to redeem the OHLSP 6.375% USD bond maturing in 2021.

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About the author

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Timothy Ang
Research Analyst
Phillip Securities Research

Timothy covers credit analysis of local and foreign bonds. Previously an equity dealer, he handled equity trade execution and portfolio management. He has presented seminars for organisations such as SIAS, SPH and IRAS, commentated live market updates for 93.8FM, and authored investment articles for the Business Times newspaper. He graduated with a Bachelor of Commerce in Accounting & Finance from the University of Western Australia.

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