Tuesday, October 27, 2015

Oxley Bonds

One thing that screams at me is the high debt ratio.

Debt is at about 2.4 billion.

Equity is only 650 mio. 

Scary debt to equity ratio if u ask me. 

The cash is 290 mio but current financial liability is 520 mio. Of course, current ratio is rather healthy at 2.5. But personally I  like to think of cash and perhaps receivables as more "current" as compare to development properties.

I took a look at their projects 

And used square foot research to check on sales. I prefer this portal than URA. If u want details let purchase price etc, u need to pay a subscription or do it manually at URA site. But for me, I just wanted to ascertain if they have many unsold units because that would mean even more troubles.

Surprising, their local residential projects are quite well sold. I did not look at their industrial project, but u can do the same at square foot research. Go for tower view, it is easier to get a sense of how how sales are

So, all in all. 

If execution goes well, and no buyers back out, then cash flow should sustain itself and this bond is safe. 

I am not buying bonds as my CPF is like my bonds allocation. 

Another way of calculation margin of safety for bonds is to used Graham method which is demonstrated by "The boring investor"


Do note that bonds are not necessarily safer than equity, it is relative less volatile but volality cannot be view as risk when solvency is ignored 


  1. Hi SI

    I see that you have made up your mind on this :)

    1. LOL B,

      It was never a option, so nope,
      Ididn't make up mind mind. I prefer cash as diversification and CPF as bond allocation .... Lol

      Because I dun have "warchest", also looking for where to carried out guerilla tactic

  2. I was reminded that some bonds have defaulted in the past. Sino-Environment Technology Group comes to mind.

    I like the fact you have placed CPF as your bond allocation.

    With a secured enough job, we are allocating money every month to "CPF Bond", this should do fine for most people.

    1. Indeed solace,

      First 60 k get 1 % more, and SA get 5%, but doomsayer will say it's a perpetuity bonds. Lol.

      But not too bad as a perpetuity bond as u ask me, just keep paying Interesy and in annuity, coupons

  3. Hi SI,

    You taught me a trick, which is to go to sqfoot research to do some diggin ;) Very funny, yesterday I was just telling my wife to prepare some funds to get this bond ipo. Then this morning I talked to her again, and then this evening. Everytime she saw me, I downgraded this until I told her not to get in LOL

    Talk about loss of confidence haha

    1. Hi LP,

      I usually do
      Not have an interest in bonds. It so happened that when I was researching on oxley years ago, my thought is an accident waiting to happen. Of course the next years prove that my assessment was wrong.

      But I remembered "上得山多终遇虎”

      I used to subscript to it and calculate the rev and using a 20% margin to estimate profits. Quite accurate ...

      Oxley has a very good profile of projects that are well sold. If it's balance sheet is stronger, I might dig further.

      My gut feel is the property cycle is nearer to the top than bottom ...

    2. It refer to square foot reseaech

  4. hi mike
    i switch my oxley position to capitaland.

    well, oxley projects are always well sold, but their b/s is very ugly...high debt...i just dislike.

    only regret thing i didn able to switch earlier. feel safer to invest in capitaland, especially after their restructuring.

    1. Capitaland and oxley definitely different league if u ask me.

      But their managemeny bukit panjang plaza which is near my place is horrible.

      They took just 1 year plus to add a wing and get the retail going but they freckling cannot get their escalators moving after months!!

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