OKP back in black with S$3.3m FY2020 earnings, lifted by government support

CONSTRUCTION player OKP Holdings posted earnings of S$3.3 million for FY2020 ended December, reversing a year-ago S$378,000 net loss, it disclosed on Monday after trading hours. This was due to government support, as well as a reversal in impairment allowance.

The mainboard-listed firm has proposed a final cash dividend of S$0.007 per share to "reward shareholders for their continuous support".

Revenue for the full year fell 14.5 per cent to S$69.6 million, mainly due to weakness in the construction and maintenance segments, where contributions fell 7.8 per cent and a 32.9 per cent respectively.

OKP's construction segment softened due to less revenue recognised from of existing and newly awarded projects. Nevertheless, this remains its largest cash cow, representing 66.2 per cent of FY2020 revenue.

The revenue weakness was partly offset by a 9.9 per cent increase in rental income, generated from investment properties. The main source is the property at 6-8 Bennett Street in East Perth, Australia, which has been fully occupied since Q2 FY2019.

Despite the revenue fall, OKP benefited from S$10.7 million in other gains, mainly from government support measures. It also saw a one-off reversal of impairment allowance of S$1.2 million following the completion of the disposal of CS Amber Development, as well as a S$800,000 forex gain due to appreciation of the Australian dollar against the Singapore dollar.

Overall, the firm's gross profit margin for FY2020 shrank 2.7 percentage points to 10.6 per cent. Its order book stands at S$254 million as at end-2020.

OKP's group managing director Or Toh Wat said that the firm continues to build resilience across its core infrastructure and civil engineering divisions, as well as in property development and investment, amid the tough Covid-19 climate.

"Strengthening of our core competencies will also remain a top priority, to ride on the gradual recovery of the overall economy and resumption of construction activities in Singapore, which is expected to be driven by projects in the public sector," he said.

"On top of a healthy order book . . . providing visibility to 2023, we will also continue our efforts in growing our property investment business segment, which has seen continued growth in providing the group with a recurring income stream."

Shares of OKP closed flat at S$0.176 on Monday.