OKP's H1 net profit down 39.4% as government support tapers off

CONSTRUCTION player OKP Holdings' net profit dipped 39.4 per cent to S$976,000 for the half year ended June 30 from S$1.6 million in the previous year, due in part to lower payouts and rebates from the government.

Earnings per share for the half year stood at 0.32 Singapore cent, down from 0.52 cent the year before. Net tangible assets per share came in at 39.36 cents as at June 30, versus 39.56 as at Dec 31, 2020.

No dividend has been declared to preserve the group's working capital to mitigate the impact of the Covid-19 pandemic, and for opportunities that may arise, said the mainboard-listed firm in its financial statement released on Wednesday.

Revenue for the half year rose 40 per cent to S$45.1 million from S$32.2 million, thanks to higher contributions from the construction and maintenance segments, as well as to an increase in rental income.

Revenue from the construction segment was up 33.8 per cent to S$30 million; that of the maintenance segment grew 70 per cent to S$11.7 million. This was due to the higher percentage of revenue recognised from a number of existing and newly awarded construction and maintenance projects during the first half of the year, which offset the temporary cessation of construction activities in compliance with the government's Covid-19 measures across the same period of time last year.

Rental income from investment properties continued to grow positively, improving 16.4 per cent S$3.4 million. This was due to rental income generated from its Australian property, the appreciation of Australian dollar against the Singapore dollar, as well as rental income from the newly acquired investment property at 35 Kreta Ayer Road.

Other gains fell 52.5 per cent to S$2.3 million, due in part to the decrease in payouts and rebates from the government, a one-off reversal of impairment allowance following the disposal of a former associated company in H1 2020 which did not recur this year, as well as a decrease in interest income and a decrease in the gain on foreign exchange.

The group said in a statement that it remains optimistic as it is being supported by a healthy pipeline of construction projects.

As of June 30, the group's order book stood at S$214.1 million, with projects extending till 2023.

It said: "With the objective of increasing productivity, the group will sustain its emphasis on integrating innovative technology, enhancing and upscaling its workforce as well as boosting the implementation of equipment and tools to scale down on the reliance on manpower."

On its property development and investment front, the group said that it will continue to explore global business opportunities to broaden its foothold in property development and investment through strategic partnerships.

Shares of OKP closed on Wednesday at 19.1 Singapore cents, up 0.1 cent or 0.5 per cent.