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10 Things to Know About OKP Holdings Ltd’s Latest Earnings

Yesterday, construction firm, OKP Holdings Ltd (SGX: 5CF), announced its financial results for the third quarter and nine months ended 30 September 2017.

Here are 10 things investors should know from the earnings announcement:

1. Revenue for the quarter fell 3.6% year-on-year to S$27.1 million.

2. Gross profit slumped 35.3% to S$2.6 million, and net profit plunged 62.4% to S$742,000.

3. On a nine-month basis though, revenue rose 18.9% to S$91.2 million. The increase was mainly due to a 147% growth in revenue from the maintenance segment, which was partially offset by a 5.7% decrease in revenue from the construction segment.

4. Revenue from the maintenance segment rose due to “higher percentage of revenue recognised from a number of both existing and newly awarded maintenance projects which progressed to a more active phase”. Meanwhile, the construction segment recorded a fall in revenue mainly on the back of “lower contribution from a few construction projects which were reaching completion, coupled with reduced revenue generated from a construction project at the Pan-Island Expressway exit to Tampines Expressway”.

5. Gross profit for the period rose 49% to S$16.6 million while net profit surged 70.1% to S$10.7 million.

6. The rise in the bottom line was due to the higher revenue and gross profit, and growth in contribution from the share of results of associated companies and joint ventures. Gain from the share of profit from a joint venture, Lakehomes Pte Ltd, the developer of the LakeLife executive condominium, based on the recognition of profits from units of the condominium which were ready for handover, gave rise to the increase.

7. The construction firm’s balance sheet strengthened in the latest period. As of 30 September 2017, OKP had a cash balance of S$75.6 million and a total debt of S$2.8 million. This translates to a net cash position of S$72.8 million. At the end of 2016, it had a lower net cash position of S$71.5 million.

8. For the nine-month period, the firm generated an operating cash flow of S$7.4 million, down from S$19.8 million raked in a year ago. Since it spent S$1.7 million in capital expenditure during the latest period, free cash flow came in at S$5.7 million, compared to 2016’s figure of S$18.7 million.

9. As of 30 September 2017, OKP’s net construction order book stood at S$288 million, with projects extending till 2020.

10. The construction outfit’s managing director, Or Toh Wat, said: “The operating environment remains challenging due to keen competition. However, the Group stays optimistic on the back of healthy demand from the public sector, given that the government is bringing forward projects worth a total of S$1.4 billion to this year and next. Meanwhile, the Group continues to work closely with the authorities on the on-going investigations relating to the worksite incident at the Pan-Island Expressway exit to Tampines Expressway. We will continue to provide all necessary assistance and support to ensure that the needs of the affected workers are fully taken care of.”

Shares of OKP are going at S$0.36 now, giving a trailing price-to-earnings ratio of 5.9 and a trailing dividend yield of 5.6%.

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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.