OKP Holdings' Q4 net profit falls 75%

INFRASTRUCTURE and civil engineering company OKP Holdings posted a 75 per cent fall in net profit for the fourth quarter, as a lower profit margin for some projects weighed on earnings.

For the three months ended Dec 31, 2017, the mainboard-listed company announced that net profit was S$2 million. Earnings per share (EPS) for Q4 2017 stood at 0.64 Singapore cent, down from 2.60 Singapore cents a year ago.

OKP's gross profit for Q4 2017 decreased by 53.8 per cent to S$5.1 million from the year before.

Gross profit margin dropped from 31.3 per cent in Q4 2016 to 19.5 per cent in Q4 2017, which was largely attributed to lower profit margins for new and some current projects as a result of a "more competitive pricing environment and rising manpower costs" during Q4 2017.

For the full year ended Dec 31, OKP's net profit fell 11 per cent to S$12.7 million. EPS was 4.12 Singapore cents, down from 4.65 Singapore cents in FY 2016.

Revenue for Q4 2017 dropped 24 per cent to S$26.1 million due to the decrease in revenue from the construction segment that was mainly due to a lower percentage of revenue recognised from a few construction projects which were reaching completion, coupled with no revenue generated from a construction project at the Pan-Island Expressway exit to Tampines Expressway during Q4 2017.

In July last year, OKP was dealt a blow when a viaduct under construction collapsed and a Chinese worker died in the accident while the injured were immediately sent to Changi General Hospital. OKP requested a trading halt following the accident.

In Q4 2017, the construction segment contributed S$17.8 million to OKP's revenue, compared to S$26.2 million in Q4 2016.

Revenue for the full year ended Dec 31, however, rose 6 per cent to S$117.3 million due to higher contribution from the maintenance segment.

OKP has proposed a final dividend of 0.7 Singapore cent per share and a special dividend of Singapore 1.3 cents per share for shareholders' approval at the annual general meeting to be held in April.

Based on OKP's closing share price of 32 Singapore cents, the total dividends of two Singapore cents per share represent a dividend yield of 6.3 per cent and a dividend payout ratio of 48.5 per cent for FY 2017, the company said.

Last week, OKP said that it had acquired its first overseas property, a freehold office complex in Perth, Australia, for A$43.5 million (S$45.2 million). Its subsidiary, Bennett WA Investment, has entered into a contract for sale to purchase the property.

The property is approximately 10,200 square metres of net lettable area and occupies a land area of about 3,100 square metres. OKP intends to purchase the property for investment, and the rental income is expected to contribute to the group's revenue.

OKP also recently announced that its wholly-owned subsidiary, OKP Land, together with Lian Soon Holdings, had acquired a land parcel at Chong Kuo Road in Sembawang.

The tender price of S$43.9 million was accepted by the Urban Redevelopment Authority on Feb 7, the company said.

The land parcel has an area of about 4,300 square metres and a leasehold tenure of 99 years. It is intended for development into a residential condominium of approximately 85 units, subject to obtaining all the necessary approvals from the authorities.

OKP closed unchanged at S$0.32 on Monday.