Downgrade to HOLD With Lower Target Price of SGD0.34

• We downgrade Oxley to HOLD from BUY with a lower Target Price of SGD0.34, based on a 50% RNAV discount (from 20% previously). 
• With almost 30% of its valuation due to the Singapore residential market, we expect the recent policy tightening to weigh on stock sentiments.
• We cut RNAV by 4.2% for ASP downgrades.

Cut ASPs; Leverage Magnifies EPS Impact

With 5-10% increases in the ABSD for property investors, we expect developers to lower their ASPs to stimulate demand. With about 3,800 housing units (as of May 2018), Oxley has one of the largest pool of saleable resource in Singapore.

Nonetheless, the company managed to de-risk part of its exposure by launching Riverfront Residences and Affinity at Serangoon before the cooling measures were implemented on 6th July.

We lower ASPs by 3-7% and cut EPS by up to 16%. We expect its elevated financial leverage to magnify the impact on its bottom line.

Source: Maybank Kim Eng Research - 06 Jul 2018