Oryx Properties Limited (Oryx) is now back in the black after it registered a N$31.1 million profit in the half year to 31 December 2021 compared to a loss of N$20.9 million in the previous comparable period due to improved rental income.
The company’s net rental income for the period rose by 7.3% y/y to N$100.8 million, against N$93.9 million in 1H22, while total revenue increased by 6.3% y/y to N$155.8 million.
Rental relief of N$8 million was provided to tenants during the period under review. Residential vacancies improved markedly from 11.2% at FY21 to 2.5% at 1H22, with the company noting that foot count has recovered well at Maerua Mall, nearly reaching the levels last seen in Q4 of 2019.
The company’s rental expenses were well contained, increasing by 4.5%, in line with inflation, while its cost-to-income ratio fell marginally from 36.0% to 35.3%.
The company’s interest-bearing borrowings increased slightly to N$1.23 billion at 1H22 from N$1.21 billion at FY2.
“Oryx’ gearing ratio remained relatively stable at 38.1% (FY21: 38.2%). Management however notes in the results release that subsequent to the end of the period the proceeds from the sale of the investment in Tower Property Fund and dividends from the associate were transferred into debt facilities, resulting in the company’s gearing declining to 37.6%. At the end of the review period, fixed rate borrowings made up 50% of total interest-bearing borrowings. The weighted average interest rate paid on the company’s debt declined from 6.7% at FY21 to 5.6% at 1H22. Total unutilised facilities stood at €2.6 million and N$193 million, excluding the medium-term note programme,” the company said.
Oryx received proceeds of N$14.9 million following the disposal of its investment in Tower Property Fund on 24 December.
The value of Oryx’ property portfolio grew by 0.4% in the last six months to N$2.84 billion
The company reported a distribution of 44.00 cents per linked unit, representing a 22.1% decline from the 56.50 cents per unit reported for the corresponding period in 2021.
Earnings attributable to linked units per unit (EPU) increased from 32.59c in 1H21 to 79.77c in 1H22. HEPU fell by 58.0% y/y to 16.51c.
Analyst views
IJG Securities
We expect rental income to remain under pressure going forward, given that negative rental reversions were recorded on the large South African national retailers’ lease agreements which were renewed towards the latter part of the previous financial year.
Overall, the interim results came in roughly in line with our expectations, but the subdued economic conditions continue to weigh on Oryx’ results.
Simonis Storm
We think the market is pricing in property sector uncertainty as well as the questionable prospects for Oryx. Investors ostensibly are not that interested. Property as we have mentioned previously is very much cyclical, awaiting the turnaround. One thing though, we have picked-up on a trend of consumers returning to malls, sounds great, but then again management was very much on the convenience shopping route e.g., Maerua Lifestyle Spar / Beins Shopping Centre. The latter seems to trend downwards / mean revert as we return to the new normal – whatever that might be.
