OKH Global Q2 net profit slumps to S$54,000 on flat revenue

CONSTRUCTION and property group OKH Global's net profit dwindled in the second quarter, as its share of contributions from associates turned negative, according to results on Tuesday.

Net profit shrank to S$54,000 for the three months to Dec 31, 2019, down from S$3.99 million in the same period the year before, even as revenue stayed flattish at S$4.2 million.

The group also noted that its construction services segment clocked a slight decrease in turnover, with fewer construction works in the quarter.

Gross profit rose from a reclassification of rental expenses as finance costs, but the bottom line was done in by how OKH's share of associate contributions swung from S$4.48 million in profits to a S$33,000 loss.

The associates saw lower rental revenue after a property was sold, higher one-off expenses such as repair and maintenance, as well as the lack of revaluation gains on investment properties from the year-ago period, OKH said.

Meanwhile, finance costs swelled by 27.3 per cent to S$2.29 million, which the company attributed to the adoption of new accounting standards that classified interest on lease liabilities as finance expenses.

Still, this was partially offset by lower interest on loans, as OKH registered the lower outstanding bank loans and lower interest rates in the quarter, it added.

Earnings per share fell to 0.005 Singapore cent from 0.35 cent before, even as net asset value ticked up to 8.21 Singapore cents a share, against 8.09 cents as at June 30, 2019.

For the six months, net profit fell by 31.4 per cent to S$2.32 million, while revenue was down 1.3 per cent to S$8.21 million.

No dividend was recommended, unchanged from the year before, with the board stating that it would keep the funds for working capital.

Predicting a challenging industrial real estate market in Singapore, OKH said that it would look for addition and alteration works opportunities to bring in recurring income.

It also did not rule out monetising some of its properties or fixed assets "to further strengthen the financial strength of the group as it explores new business opportunities".