OKP Holdings (5CF) H1 2023 earnings summary

Executive summary

• H1 2023 revenue rose 30.6% YoY to S$70.0m; net profit was S$35.8m, mainly reflecting a S$43.8m arbitral award related to the Contract 449A worksite incident.

• Higher material, subcontracting and manpower costs squeezed construction and maintenance margins, reducing gross profit 58.6% to S$2.1m.

• The S$383.7m order book at 30 June 2023 provides project revenue visibility through 2026; a 0.5 Singapore cent per-share special interim dividend was declared.

Financial highlights

• Revenue increased from S$53.6m to S$70.0m, while cost of sales rose 39.8% to S$67.9m.

• Gross profit fell to S$2.1m from S$5.0m; gross margin declined to 2.9% from 9.3%.

• Other gains rose to S$45.1m, including the S$43.8m arbitration award; higher interest income and lower FX losses contributed, partly offset by lower government grants.

• Profit before tax was S$38.9m versus S$1.8m; net profit was S$35.8m versus S$1.3m, and attributable net profit was S$35.6m versus S$1.2m.

Outlook and guidance

• Construction demand is projected at S$27bn–S$32bn in 2023 and S$25bn–S$32bn annually in 2024–2027; a healthy pipeline supports tendering.

• Priorities include disciplined cash-flow management, a prudent capital structure, productivity gains through technology, recurring income and earnings diversification.

• Residential land replenishment is expected to remain selective amid a challenging private housing market; experienced partners may be explored for property development and investment.

• The Essence achieved full sales and TOP; all 74 Phoenix Residences units were sold, with TOP expected in July 2024.