OKP Holdings

[vader1671]

I took a look at OKP some time in the past and I really liked what I see. The ROE/ROA was really impressive. However, I decided to put my money into CES (which is also doing very well).

Perhaps it's time to look at OKP again. But it may be fairly valued with a 10x PE. Still wondering how the hell they manage to generate such a high ROE just building roads though. When will we run out of land to build roads?

[mrEngineer]

About OKP, I always wondered the method they use to mitigate their risks as below:-
1) Their main material is bitumen (oil byproduct); whether they have a fluctuation clause in the material price as their contract can be for a period of upto 3 years but oil prices is only going one direction, their margins would suffer immensely.
2) Their works are very labour intensive; the Government intent and actual increased in work permits or other levees on foreign workers.
3) Weather; rainy weather and the amount of water have increased dramatically which affected down-time and or damages to just-laid road surfaces, water clogged areas, etc.
4) Increased claims from sub-contractors.

Any comments?

Some comment to share:

1) Bitumen and oil prices do not correlate fairly well. The bitumen prices depends more on the demand of the product and not so much the extraction costs. There is plenty of supply of bitumen usually.

2) One can check the employee costs and do a scenario analysis of mark up 20-50% and check whether the margins are still favorable.

3 & 4) Rainy weather is a day to day business managment issue. If the company survives for many years, it should have ideas to manage this well.

[edragon]

mrEngineer,

Thanks for comments.
Their net profit was between 12-15% against Turnover last quarter/full year.

[dzwm87]

OKP seem to be enjoying higher margins & they are currently in net cash position. Planning to dig deeper into this company. Anybody did any research on OKP already?

About OKP, I always wondered the method they use to mitigate their risks as below:-
1) Their main material is bitumen (oil byproduct); whether they have a fluctuation clause in the material price as their contract can be for a period of upto 3 years but oil prices is only going one direction, their margins would suffer immensely.
2) Their works are very labour intensive; the Government intent and actual increased in work permits or other levees on foreign workers.
3) Weather; rainy weather and the amount of water have increased dramatically which affected down-time and or damages to just-laid road surfaces, water clogged areas, etc.
4) Increased claims from sub-contractors.

Any comments?

Anyway, how did you know Bitumen is their main raw material?

[Musicwhiz]

OKP seem to be enjoying higher margins & they are currently in net cash position. Planning to dig deeper into this company. Anybody did any research on OKP already?

Nope, but it would be great if you could start and share it with us!

[Drizzt]

OKP has a very good balance sheet income statement and cash flow statement.

its riding on a construction boom

[karlmarx]

i don't think there's a construction boom.

but i do think okp has a good number of government contracts on infrastructure works, which has kept it ahead of other construction companies.

[yeokiwi]

i don't think there's a construction boom.

but i do think okp has a good number of government contracts on infrastructure works, which has kept it ahead of other construction companies.

Have you visited Punggol?
I had lost count of the no. of cranes.

Due to the building of IRs, many construction of the public facilities were delayed. This year, there will be 30000 HDB flats, many MRT stations and depots, sport hub, marina south(khazanah is dying to build some buildings..), expansion of marina sands(hey... the conference venues are fully booked and hotel occupancy hits 98%) if Sing Gov agrees, Jurong lake district, SUTD and quite likely, the terminal 4 of changi airport.

I wonder how many of them will be canceled when recession hits..haha..

[dzwm87]

i don't think there's a construction boom.

but i do think okp has a good number of government contracts on infrastructure works, which has kept it ahead of other construction companies.

Have you visited Punggol?
I had lost count of the no. of cranes.

Due to the building of IRs, many construction of the public facilities were delayed. This year, there will be 30000 HDB flats, many MRT stations and depots, sport hub, marina south(khazanah is dying to build some buildings..), expansion of marina sands(hey... the conference venues are fully booked and hotel occupancy hits 98%) if Sing Gov agrees, Jurong lake district, SUTD and quite likely, the terminal 4 of changi airport.

I wonder how many of them will be canceled when recession hits..haha..

must be cautioned that OKP is mainly focused in infrastructure construction. HDB & even MRT railways are unlikely a sales driver for them since they have relatively no experience in that area. Main sales construction driver for OKP will be expressway or road widening. Latest Annual Report under LTA did show a lot of new projects coming up - big scale one is the North-South expressway

[weijian]

Have you visited Punggol?
I had lost count of the no. of cranes.

Due to the building of IRs, many construction of the public facilities were delayed. This year, there will be 30000 HDB flats, many MRT stations and depots, sport hub, marina south(khazanah is dying to build some buildings..), expansion of marina sands(hey... the conference venues are fully booked and hotel occupancy hits 98%) if Sing Gov agrees, Jurong lake district, SUTD and quite likely, the terminal 4 of changi airport.

I wonder how many of them will be canceled when recession hits..haha..

i thought the gov will normally accelerate the building of public facilities when recession hits? This is done to cushion against the slowing economy...Isn't that so?