Management Q & A
Thank you very much for the questions and the opportunities to clarify them. We hope you have a better understanding of our business through this online exchange.
Your questions will be reposted in blue followed by our replies in black.
The Management Team
OKP Holdings Ltd
Dear David, you wrote:
What's the impact from the regression of the United States? I spent all my savings to buy OKP shares and I am so worried about the economic crisis. Thanks so much!
Thank you for your confidence in OKP Holdings. The situation in the US has contributed to the global financial turmoil that will continue to add an element of uncertainty to the market.
As a leading infrastructure and civil engineering company active in public sector construction work and civil works in the oil & gas sector, OKP continues to be confident that it can continue to grow its business locally. For your information, our current order book based on secured contracts stands at approximately $209.2 million.
Here are some reasons for our confidence:
- Continued strong local construction demand
Given the strong Gross Domestic Product growth and positive prevailing business sentiment, we believe the construction outlook for 2008 to be optimistic and expect the construction demand in Singapore to remain healthy over the next few years.
- The Building and Construction Authority has estimated that the total construction demand is likely to reach between $23 billion and $27 billion in 2008, if all planned projects proceed as scheduled.
- TConstruction GDP growth rate is expected to be sustained at double-digit for 2008.
- Optimistic Oil and Gas Outlook
Against such a backdrop, it would appear that this market could also present OKP opportunities to grow its presence in the Oil and Gas Sector in the coming years.
- The year 2007 saw the commitments in Fixed Asset Investments brought in by the Singapore Economic Development Board (EDB) exceeding S$10 billion. Some of the capital-intensive projects that EDB managed to attract included ExxonMobil's second world-scale petrochemical project and Neste Oil's world's largest next-generation biodiesel manufacturing plant.
- The oil industry is an important and integral part of the Singapore economy, making up 5% of the nation's GDP. The government is keen to expand its current 1.3 million barrels per day of refining capacity to tap into a growing global refining market that is expected to increase by another 30 million barrels per day by 2030.
- A growing track record
- We have a solid track record in public sector works dating back to 1960s
- We are gradually building up a credible track record in Oil & Gas, having completed our S$50 million Universal Terminal contract in Jurong Island and having secured the S$40 million contract in relation to ExxonMobil project.
- A focus on streamlining our manpower
- Over the years, we have streamlined and restructured our manpower, training and development accordingly to specialist capabilities to handle projects more effectively.
- Currently, three such teams are in place, namely, Oil & Gas/Petrochemical, Airport Infrastructure and Road Construction & Maintenance.
- Maintaining our strategic focus
- We will continue our strategy of focusing on our traditional civil engineering business, and leverage on our established track record, expertise and strengths as the first and preferred choice of civil engineering contractor for various industries, here and overseas
- We will continue to tender for both public and private civil engineering projects to strengthen our construction order book.
- We are actively exploring opportunities for new business opportunities and appropriate investments to grow our business.
Dear jayster, you wrote:
1. I was wondering how OKP got hooked up with Rotary in the JV, OKP (Oil & Gas) Infrastructure?
2. What O&G project is this JV currently bidding for and how much % of sale do you project this JV will contribute to OKP's book in FY09?
1) It started with the award of our first and biggest Oil and Gas sector project by Rotary. In order to tap on our synergy and to generate new opportunities for OKP in the Oil and Gas sector, we formed OKP (Oil & Gas) Infrastructure Pte Ltd, a 55-45 joint venture with Rotary Engineering Limited to undertake civil engineering projects in the local oil and gas industry.
2) We are currently tendering for a number of O&G projects. These are in preliminary stages and we shall make the necessary announcements as new contracts are secured. We are not able at this juncture to project how much it will contribute to our sales in FY2009.
Dear Marcus Ng, you wrote:
1) I would like to enquire on the F1 racing contract OKP got from LTA. Is this a once off contract to prepare the road for the races or is there a maintenance contract for future road races?
2. Would this contract lead to OKP venturing abroad to maintain F1 circuits around the world?
1) This is a once-off contract with no accompanying maintenance contract.
2) With the award of the Singapore F1 contract, F1 organisers from other parts of the world may consider asking OKP for similar contracts.
Dear Serene Lim, you wrote:
Congrats on the great set of results for FY07.
OKP cash has doubled to $19.4M in FY07. What do OKP intend to do with this cash hoard?
We will use our cash for business expansion.
Dear Gerald Tan, you wrote:
OKP's operation is mainly in Singapore with few projects overseas except for the Rota airport runway project.
With the booming Asian economy fuelling demand for construction of infrastructure projects, do OKP intend to expand to regional countries like Vietnam and which areas of the business do OKP hopes to export to the world?
For the next one year or so, we will continue to stayed focused on the domestic market as there continues to be strong demand in the construction as well as the O&G sectors in Singapore. We do not rule out the possibility of expanding to other markets and/or other related businesses should the opportunities arise.
Dear Kelvin Khoo, you wrote:
OKP is a family run business. Westerner view family run business as unprofessional and runs the risk of succession problems should the next generation is unable to continue the business.
What succession plans do OKP have to ensure the best talents is employed to maximise shareholder's value?
We appreciate your concerns and would like to assure you that we take our commitment to maximizing shareholders' value very seriously. We adhere to a recruitment policy that sees us engaging the most suitable candidates for the job. We assess their professional capabilities, their ability to work as a team and contribute to the company. We have a number of team members in our management that are not family members. The team of people at OKP has the right combination of experience, knowledge and foresight and more importantly, we all work towards the interests of OKP.
Thank you for all your questions and the interest in OKP Holdings Ltd. We have come to the end of this Q&A session.
We have enjoyed and learnt much from your questions and we hope that you have a better insight of our Company and know more about our operations.
The Management Team
OKP Holdings Ltd.