OKP Holdings profit up 10% to $3.2mln

Group's construction segment maintained its position as highest contributor to group's $40mln revenue.

Mainboard-listed infrastructure and civil engineering company OKP Holdings Limited on Monday announced its financial results for first quarter ended 31 March 2010. The Group posted revenue of S$33.9 million and net profit after tax and minority interest of S$3.5 million. These results compare to revenue of S$29.6 million and net profit of S$3.2 million, in the same corresponding quarter a year ago, up 14.5% and 10.1% respectively. Earnings per share (basic) stood at 1.54 cents compared to 1.42 cents previously, an improvement of 8.5%, according to an OKP Holdings report.

The construction segment continued to contribute the lion's share of overall revenue, recording revenue of S$27.4 million for the quarter, an increase of S$6.5 million or 31.1% from the S$20.9 million in the previous corresponding period. This was mainly attributed to a higher percentage of revenue recognised from a few construction projects which were in full swing in the period under review. The maintenance segment registered revenue of S$6.5 million compared to S$8.7 million in the previous corresponding quarter. The difference was due primarily to the substantial completion of existing maintenance projects in the first quarter of 2010 and the absence of new maintenance contracts secured for the period.

Corresponding to the increase in Group's revenue, gross profit increased by S$0.9 million from S$4.9 million previously to S$5.8 million for the three months ended 31 March 2010. Gross profit margin stayed fairly stable at17.1% against 16.5% recorded in the previous corresponding quarter.

The Group's activities continue unabated with numerous large public sector projects across the island including the Land Transport Authority's project to widen the Central Expressway from Pan Island Expressway to Braddell Interchange,the Urban Redevelopment Authority’s contract for environmental improvement works at Siglap Village, Upper Serangoon Road and Kampong Sireh, and the National Parks Board's project to build three park connectors as well as the contract from Foster Wheeler Asia Pacific Pte Ltd. and Worley Parsons Pte Ltd to carry out civil works on Jurong Island.

To date, the Group has secured three public sector projects totaling approximately $39.5 million. The projects include construction and maintenance works at Tuas South Avenue 12 and Tuas South Avenue 14 worth $5.2 million from the Jurong Town Corporation, ad hoc repairs and upgrading of roads, road related facilities and road structures in Central Sector for a period of 39 months worth $19.4 million and ad hoc repairs and upgrading of roads, road related facilities and road structures in North West Sector for a period of 39 months worth $14.9 million from the Land Transport Authority.

The above projects will be completed and delivered to clients progressively from now until 2013. The Group’s order book stands at S$306.1 million based on secured contracts as at 10 May 2010, with some projects completing in 2013.

OKP is a leading home-grown infrastructure and civil engineering company in the region specialising in the construction of urban and arterial roads, expressways, vehicular bridges, flyovers, airport infrastructure and oil & gas-related infrastructure for petrochemical plants and oil storage terminals. The Company is also engaged in maintenance works for roads and roads-related facilities as well as building construction-related works.

Strong balance sheet The Group’s assets totalled S$130.4 million and net tangible assets added up to S$63.1 million as at 31 March 2010 compared to S$122.4 million and S$57.2 million respectively as at 31 December 2009. This gives net tangible assets of 24.4 cents per share, up 5.2% compared to 23.1 cents per share as at 31 December 2009.The Group's networking capital was positive at S$50.8 million, up 13.9%compared to the previous corresponding period. The Company recorded a net cash position of S$83.1 million as at 31 March 2010. Its market capitalization stood at S$122.7 million, based on the closing share price of S$0.465 as at 10 May 2010.

Looking ahead, the Group will continue to leverage its track record and financial strength to participate in tenders for larger civil engineering projects in order to generate higher profitability as well as to raise its business profile in the construction industry. Apart from public sector works, it will also look to extend its civil engineering capabilities into the Oil & Gas sector.

Should the opportunity arise, the Group is open to expanding its business through acquisitions, joint ventures or strategic alliances that can complement their current business and that can potentially provide access to new markets and prospective clients.