Background: OKP is a local infrastructure and civil engineering company. It specialises in the construction and maintenance of roads, airport, and oil and gas-related infrastructure for petro-chemical plants and oil storage terminals.
Recent development: OKP delivered a strong set of results for 1H11 with net profit rising by 56% to $12.1m from $7.8m a year ago. Outstanding orderbook reached a new record of $382m, with most projects completing over 2011-13.
Our view
Strong flow of building contracts. Since the start of the year, OKP has secured five public sector projects worth $100.3m. It is worthwhile to note that the company was awarded the $83.5m building contract for 21 Anguilla Park, China Sonangol’s first project in Singapore. The Chinese firm, which currently owns 9.24% of OKP, recently acquired Amber Towers and OKP stands a good chance of securing the construction contract, valued at $85m. It has also submitted the lowest bid of $46.8m for a PUB contract whose tender closed in June 2011. The contract is under evaluation.
Improving margins. Gross margins stood at 39.4% in 2Q11, up 26.7% QoQ. Management attributed the improvement to cost savings achieved in design-and-build road projects such as the CTE widening contract. The recently secured design-and-build contract for road works at TPE should help to sustain margins at above 30% going forward.
Property development. OKP is in a strong net cash position of $97m, which makes up more than
50% of its market capitalisation. With the cash, the company could venture into property development as the new business was approved in last year’s EGM. Opportunities include taking a minority stake in China Sonangol’s Amber Towers, buying a GLS site, or entering the en bloc market.
Key ratios…
Price-to-earnings: 9.7x
Price-to-NTA: 2.54x
Dividend per share / yield: 5 cts / 7.9%
Net cash per share: $0.32
Share price S$0.63
No of shares (m) 304.4
Market cap (S$m) 191.8
Free float (%) 35.39%
Recent fundraising Jan 2010: Rights issue of 61.8m warrants (ex price at $0.20) on the basis of 1-to-4 ordinary shares
Financial YE 31 December
Major shareholders Or Kim Peow Invt – 55.37%, China Sonangol Int’l – 9.24%
YTD change 13.04%
52-wk price range S$0.432-0.685
No comments:
Post a Comment