OKP Holdings to keep an eye on share buybacks as Covid-19 delays construction works

CONSTRUCTION group OKP Holdings will "exercise prudence" when it comes to share buybacks, the board told shareholders in a filing on Saturday, as it warned that it expects to take a hit from the "circuit-breaker" business shutdown amid the coronavirus pandemic.

Replying to investor queries ahead of its Monday morning annual general meeting webcast, the board confirmed that projects will be delayed as construction activities came to a halt.

OKP has also had to close the showflat for The Essence, a private-home development that was launched in March 2019 and is about 47.6 per cent sold.

The board said that it "will explore alternative marketing strategies" for The Essence, which is expected to receive its temporary occupation permit (TOP) in 2023, and plans to launch Phoenix Heights in the second half of 2020, "depending on the prevailing market conditions".

OKP noted that the Singapore construction industry has been affected by the authorities' temporary suspension of construction activities, as well as shortage of materials from global supply chain disruption, and a possible manpower crunch as the deadly Covid-19 disease spread to foreign worker dormitories that are now under lockdown.

Housekeeping, safety and environmental maintenance works at project sites are still ongoing.

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"The company expects an adverse financial impact during the circuit-breaker period due to the loss of revenue, the delays to project completion timelines and the continual incurring of fixed costs such as staff costs," the board disclosed, although it also noted that business support measures from the government will help to soften the blow.

"Meanwhile, the group is preparing and making the necessary arrangements to recommence full business operations as soon as possible after the circuit-breaker measures are lifted."

As for share buybacks, OKP directors noted that the company has bought back some 801,200 shares between March 18 and April 17 but "will continue to monitor its share price performance closely and exercise prudence as it undertakes further share buybacks".

"The company will consider the amount of cash surplus available and the prevailing market conditions before doing so," the board added.

The counter added 0.1 Singapore cent last Friday, or 0.56 per cent, to close at S$0.18 on a cum-dividend basis.