OKP Holdings Q1 profit down 62.4% amid losses at property associates

MAINBOARD-LISTED construction player OKP Holdings, which has made a foray into real estate development, took a hit from the ramp-up in that segment in the first quarter.

Net profit plunged by 62.4 per cent year on year to S$1.07 million for the three months to March 31, according to financial results released on Monday.

Revenue fell by 16.8 per cent to S$19.2 million, outpacing the decrease in the cost of sales.

OKP's fledgling property investment arm posted a surge in revenue gains in the quarter, on rental income from a Perth office tower which was bought in April 2018 and is now 68 per cent occupied.

But contributions from the core construction segment, which make up almost two-thirds of turnover, slipped by 5.4 per cent, on lower revenue recognised from projects which were almost done as well as those that had been newly awarded in the quarter.

Turnover from maintenance was nearly halved, on lower revenue recognised from new projects.

OKP also recorded a share of losses from associates and joint ventures, to the tune of S$531,000, compared with an earlier profit.

The group bottom line was dragged down by losses at 22.5 per cent-owned associate Chong Kuo Development, which is developing The Essence in the Upper Thomson area, and 25 per cent-owned USB Holdings, which is redeveloping the Phoenix Heights collective-sale site.

The Essence was launched in March 2019, while OKP said that the Phoenix Heights project "is also on track", with a fresh 99-year extension on the land lease from the Singapore authorities.

Earnings per share fell to 0.35 Singapore cent, from 0.92 Singapore cent before, while net asset value was 39.89 Singapore cents a share, against 39.49 Singapore cents as at Dec 31, 2018.

No dividend was recommended, unchanged from the same period in the year before.

OKP managing director Or Toh Wat said in an outlook statement: "We will direct our team's efforts to sharpen our competitive edge in our core civil engineering business whilst improving productivity and efficiency."

"The group will also keep an active lookout for appropriate opportunities to diversify our earnings, by expanding our foothold in the property segment through strategic tie-ups with experienced partners, both locally and abroad," he added.

OKP was described as "cautiously optimistic of healthy industry prospects in the near to medium term", with an order book of S$291.6 million until 2023.

OKP closed flat at S$0.23, before the results were released.