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Lower Profits in 2Q 2013 for OKP

okp logo Home-grown construction company, OKP Holdings Limited (SGX: 5CF) released its 2Q 2013 results yesterday.  Revenue for the quarter increased by 27.5% over the previous year.

Even though the revenue was up, increasing cost of goods gave rise to lower gross profits at $2.5 million, a 57.1% drop over the previous year. The gross profit margin was consequently at 8.2% versus 24.3% the previous year. The net profit for 2Q 2013 was at $0.7 million, which was a 77% plunge over the same period last year. The net profit margin was at 2.4% versus 13.1% in 2Q 2012.

The net profit for 1H 2013 at $3.1 million saw a 49.7% drop over 1H 2012. The net profit margin for 1H 2013 was at 5% while that in 1H 2012 was at 12.6%.

The diluted earnings per share (EPS) for 1H 2013 was 1.0 cent. This was a drop of 49.7% over the same period last year. If annualised, the EPS will be at 2.0 cents. OKP closed at $0.41 on 29th July 2013. Using the annualised EPS, the PE ratio would be at 20.5.

As of 30th June 2013, OKP is sitting on a cash pile of $42.5 million while the total debt is at $1.8 million. The cash flow from operations for 2Q 2013 was at a negative $2.1 million. Capital expenditure was at $0.7 million.

The gross order book stands at $428.8 million with projects lasting till 2015. No dividends were declared for 2Q 2013.

Commenting on the growth outlook, Mr Or Toh Wat, Managing Director of OKP, said, “We believe that the outlook for the construction industry will remain positive but competitive for the next twelve months. In light of the increasing competition, we plan to prospect actively for larger, more complex civil engineering projects that generate greater profitability for the Group. We will also continue to adopt productive methods and technologies to improve the efficiency of our construction process and keep a lid on our costs. Apart from public sector works, the oil and gas sector remains an area we have earmarked for growth.”

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.