OKP Holdings

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(11-05-2024, 01:57 PM)weijian Wrote: The main bright point of OKP's 2H23 was the big increase in GP and naturally follows the question of whether "a higher GP  than post accident" is sustainable or not. A shareholder has asked about it and Mgt is giving good vibes from the answer.

MINUTES OF TWENTY-SECOND ANNUAL GENERAL MEETING

Question: It is noted that the gross profit margin of the Group had increased and the Group has a large order book. Will the margin for FY2024 be higher, lower or the same?

Answer: The gross profit margin should be sustainable. The projects in FY2022 were mainly secured before the COVID-19 pandemic. For FY2023, the projects were mostly secured after the COVID-19 pandemic and had better margins. There was also the arbitration award in 2023. The Management is mindful of securing contracts with good profit margins during the tender. As disclosed on the GeBIZ website, the Group was recently awarded a new cycling path network project by LTA and an announcement would be made once it has been cleared by LTA. The Group is aware of future contracts and will allocate its resources accordingly when deciding on which contracts to tender for.

https://links.sgx.com/FileOpen/2024%20AG...eID=802970

A good set of results - As indicated by Mgt during AGM few months ago, 1H24's GPM is at 28%, which is comparable to 2H23's 25%. We should be expecting this GP to persist, I suppose.

But the biggest question is of course, will the Ors (sufficiently) share? Or will they be "diversifying" most of the bonzana into investment properties for "recurring income". After all, plenty of stuff available when you have the cash. Ors could also buy 1-2 hotel buildings and try their hand in hospitality. Nothing is more prestigious that that, I suppose.

Half Year Financial Statements for the Period Ended 30 June 2024

Looking ahead, the Group expects continued global uncertainties, including sustained high interest rates and rising construction costs. Nevertheless, the Group will embrace technologies and innovation to enhance operational efficiencies. This will help mitigate the impact of rising construction costs, while creating better sustainable built environments for all. Supported by a healthy pipeline of construction projects, the Group will remain vigilant in navigating challenging market conditions, ensuring effective cashflow management and maintain prudence in its capital structure and finances. As of 30 June 2024, the Group’s order book stood at a record high of $706.9 million, with projects extending till 2027.

To enhance its recurring income, the Group owns a portfolio of investment properties. These include a freehold, three-storey shophouse situated at 35 Kreta Ayer Road as well as freehold, two-storey conservation shophouses located at 69 and 71 Kampong Bahru Road. These properties, held through its 51%-owned subsidiary, Raffles Prestige Capital Pte. Ltd., continue to generate a steady stream of recurring rental income, contributing positively towards the Group’s performance. Backed by a strong track record and decades of industry expertise, the Group remains committed to its long-term strategy of diversifying earnings and building on its portfolio recurring income stream. The Group will continue to explore strategic partnerships to strengthen its foothold in property development and investment ventures and will embrace technologies and innovations to achieve a more sustainable future.

https://links.sgx.com/FileOpen/OKP%201H2...eID=814691
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OKP@66cents

FY2024 results was released in 25 Feb 2025:
  • REV +13.3%
  • GP +135.4%
  • NP -30.9% (mainly due to absent of one-off award)

Dividend of 2.5cts consists of 1cts + 1.5cts (special dividend) xd on 8 May 2025 (link to SGX)

On 1 Apr 2025, Nicholas Yon (Lim & Tan) initiated a analyst report on OKP (link to OKP website)

Quote:OKP Holdings, with its holistic range of construction services, stands out as a prime candidate to capitalize on Singapore’s construction boom. This long-awaited multi-year upcycle will see construction demand reaching historical highs. Commanding a robust order book (S$600.7mln) and a solid net cash position (c.63% of market cap) as of FY24, OKP boasts a compelling mix of strong fundamentals, including attractive valuations and a stellar track record. Additionally, with its operating leverage, OKP is better poised to capitalize on the construction boom, allowing it to deliver record profits and potentially raise dividends in FY25.
We thus initiate a BUY recommendation on OKP Holdings with a target price of S$0.93, based on a 8x forward P/E, in line with peers average. OKP is well supported by it’s 35 cents net cash and our ascribed 8x P/E target conservatively represents a c.21% discount to its trough P/E of 10.1x in 2016 when its previous peak earnings came in at S$14.5mln.

As of today, OKP is my top 3 SG holdings and I am confidence of it's strong management capabilities in the uncertainty ahead. 

Enjoy a talk by Nicholas Yon on Construction Sectors in 2022:


Gratitude!
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