Oxley Holdings Limited (SGX:5UX), a S$2.16B small-cap, is a real estate company operating in an industry which is the most prevalent industry globally, and has continued to play a crucial role in the portfolios of investors. Real estate analysts are forecasting for the entire industry, negative growth in the upcoming year , and an overall negative growth rate in the next couple of years. Unsuprisingly, this is below the growth rate of the Singapore stock market as a whole. Today, I will analyse the industry outlook, and also determine whether Oxley Holdings is a laggard or leader relative to its real estate sector peers. Check out our latest analysis for Oxley Holdings

What’s the catalyst for Oxley Holdings’s sector growth?

Not every category of real estate is likely to be impacted the same by macroeconomic factors such as interest rate hikes, and not all locations are primed to grow. So, investors must remain cautiously optimistic and analyse the fundamentals of the underlying industry. In the previous year, the industry saw growth in the thirties, beating the Singapore market growth of 11.47%. Oxley Holdings lags the pack with its negative growth rate of -19.58% over the past year, which indicates the company will be growing at a slower pace than its real estate peers. However, the future seems brighter, as analysts expect an industry-beating growth rate of 1.22% in the upcoming year.

Is Oxley Holdings and the sector relatively cheap?

Real estate companies are typically trading at a PE of 10.52x, in-line with the Singapore stock market PE of 13.99x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. Furthermore, the industry returned a similar 6.98% on equities compared to the market’s 7.34%. On the stock-level, Oxley Holdings is trading at a PE ratio of 10.52x, which is relatively in-line with the average real estate stock. In terms of returns, Oxley Holdings generated 16.74% in the past year, which is 9.77% over the real estate sector.

Next Steps:

Oxley Holdings’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this high growth prospect is most likely factored into the share price, given the stock is trading in-line with its peers. If Oxley Holdings has been on your watchlist for a while, now may be the time to enter into the stock. If you like its growth prospects, you’ll be paying a fair value for the company. However, if you’re hoping to gain from an undervalued mispricing, this is probably not the best time. However, before you make a decision on the stock, I suggest you look at Oxley Holdings’s fundamentals in order to build a holistic investment thesis.