Could Oxley Holdings Be A Value Real Estate Development Stock?

MASBuilding-Singapore-20090914Many Singapore REITs appear good value. But what about real estate developers – how could they fare in the eye of a value investor?

A cursory look fails to provide offer obvious bargains. Whilst several Singapore-focussed real estate developers are trading at appealing earnings multiples, they are let down by their low yields and disappointing price-to-book ratios. Many also have debt.

Take for example, Oxley Holdings (SGX: 5UX), which is one of Singapore’s largest developer. Oxley develops residential, commercial and industrial properties, primarily for home buyers and small to medium enterprise owners.

The company trades at around six times earnings, which is good from the perspective of the value investor. However, Oxley does not pay a dividend. It also trades at close to five times book value, whilst carrying significant debt. These values are unlikely to be viewed in a good light by value investors.

Other real estate development companies include Bukit Sembawang Estates (SGX: B61), Fragrance Group (SGX: F31), Aspial Corp (SGX: A30) and Roxy-Pacific Holdings (SGX: E8Z).

Sim Lian Group (SGX: S05) looks interesting. It is involved in much the same work as Oxley, along with some other side activities. Sim Lian, like Oxley trades at a tempting PE, in this case it is just 5.5 times earnings. However, Sim Lian pays out a dividend. The yield is 5.3%. It is also trading at a 10% discount to its book value.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Adam Kuo doesn’t own shares in any companies mentioned.