OKP Holdings Ltd’s Latest Earnings: What Investors Need to Know
OKP Holdings Ltd (SGX: 5CF) is a home-grown infrastructure and civil engineering company, specialising in the construction of airport runways and taxiways, expressways, flyovers, etc. It recently went into property development and investment.
Yesterday, the firm announced its second-quarter earnings. The financial period was from 1 April 2017 to 30 June 2017.
Here’s a quick rundown on the financial figures from the latest quarter:
1. Revenue came in at S$34.4 million, surging 43.2% year-on-year. Both its business segments – Construction and Maintenance – saw revenue increments. The higher revenue from both segments was mainly due to “some of the projects progressing to a more active phase during the second quarter ended 30 June 2017”.
2. Net profit nearly doubled, from S$2.5 million in the corresponding quarter last year to almost S$5 million in the latest quarter. OKP clocked in a net profit margin of 14.4% for the quarter, a vast improvement from last year’s figure of 10.4%.
3. Consequently, earnings per share for the second quarter was at 1.61 Singapore cents, up from 0.81 in the previous year’s corresponding quarter.
4. As at 30 June 2017, OKP had S$77.3 million in net cash. This is an 8.1% improvement from the S$71.5 million in net cash it had as at 31 December 2016.
5. Despite the increase in net profit, the firm used net cash of S$2.7 million for operating activities in the second quarter, as compared with net cash of $13.2 million generated last year. OKP attributed the poorer performance largely due to an increase in net working capital and higher tax paid.
No dividend was declared for the second quarter ended 30 June 2017. This is probably due to the negative cash flow from operations for the quarter. For the second quarter of 2016, shareholders received an interim dividend of 0.5 Singapore cent per share.
OKP had a net construction order book of S$299.0 million as at 30 June 2017, with projects extending till 2019. In comparison, at the end of the second quarter of 2016, it had a higher order book of S$391.3 million
In June this year, the construction outfit sealed two contracts from JTC worth around S$20.5 million to carry out infrastructure works at Admiralty Road West, North Coast Avenue, Attap Valley Road, and Bulim in Jurong West.
Group Managing Director, Mr Or Toh Wat, commented on the challenges going forward and on the mishap that happened recently:
“The operating environment remains challenging as the sector continues to face keen competition.
Meanwhile, the Group is very saddened by the unfortunate and regrettable incident at the Pan-Island Expressway exit to Tampines Expressway on 14 July 2017. The Group is working closely with the authorities on the on-going investigations arising out of the incident. The Group will continue to provide all necessary assistance and support to ensure that the needs of the deceased’s family and the other affected workers are fully taken care of. The Group is currently assessing the damages and additional costs for this project.
Moving forward, we will continue to deliver on existing projects.”
Shares of OKP ended at S$0.37 on Monday. This translates to a trailing price-to-earnings ratio of close to 6.