Dear Investors,
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.
Rgds,
The Management Team
OKP Holdings Ltd
Dear Keith Oh, you wrote:
Company is in a net cash position in excess of $74 mil. Any intention to return capital or pay higher dividends to shareholders. In finance, too much cash is bad when it is not put into good use. It lowers return on capital.
The Group believes that there is a need to maintain a robust balance sheet, especially when the operating environment is expected to remain challenging due to the impact of the COVID-19 pandemic. The Group intends to use the cash to build on its core engineering capabilities and sharpen its competitiveness, as well as to bid for higher value contracts which often require service providers to have a sound balance sheet.
The Group will also consider potential M&A opportunities which complement our existing businesses.
For FY2020, the Board has proposed a one-tier tax-exempt dividend of 0.7 cent per ordinary share, which represents a dividend yield of 4.0%, based on OKP's closing share price of S$0.176 as at 22 February 2021.
Share price is trading way below book value. Daily trading volume is low. How is management looking to boost share price and enhance shareholders' value? Share split? Or more effort into IR to create interests?
With respect to share price, it is a function of market conditions. The Group will prioritise strengthening its business fundamentals and growth strategies, and leave the share price to market forces.
The Group is committed to ensuring that its investors have a full understanding of and are kept fully updated on its strategic directions, business operations and market setting so that they can make informed investment decisions.
To achieve this goal, the Group engages frequently with its investors via various channels. The Group's senior management and investor relations team are accessible through these communication channels to the investment and financial community, and the media.
The Group's guiding principle in relation to its shareholders is its commitment to maximising their return on investment while maintaining excellence in its products and services. The Group remains steadfast in developing and increasing long term value for its shareholders and investors.
How will OKP future tender prospects for LTA jobs be affected by the unfortunate accident at PIE?
There are lessons to be learnt as with any accident. Safety is always our top priority in our workplace, as we continue to focus on delivering projects and strengthening our order book. The Group will continue with its good workplace safety practices and also work on further developing a culture of safety by establishing safety and environmental awareness programmes.
Backed by over 50 years of track record and strong technical capabilities, the Group remains committed to securing new projects to add to its order book. At the same time, the Group will continue to cultivate long-term relationships with clients.
Dear Davis Huang, you wrote:
Would like to ask whether the case of Tampines Express Accident has been closed for the company and are there any potential financial effects in the future.
The trial relating to the accident has concluded and our subsidiary, Or Kim Peow Contractors (Pte) Ltd, and our two employees have been convicted on 22 January 2021. A hearing for the sentencing is fixed for 8 and 9 April 2021. The Company will provide further updates when appropriate.
There are lessons to be learnt as with any accident. Safety is always our top priority in our workplace, as we continue to focus on delivering projects and strengthening our order book. The Group will continue with its good workplace safety practices and also work on further developing a culture of safety by establishing safety and environmental awareness programmes.
Backed by over 50 years of track record and strong technical capabilities, the Group remains committed to securing new projects to add to its order book. At the same time, the Group will continue to cultivate long-term relationships with clients.
Dear C McCoole, you wrote:
Who is the 49% shareholder in Raffles Prestige and can the JV agreement for this company be reviewed upon request?
Raffles Prestige Capital Pte. Ltd. has an issued and paid-up share capital of S$100, of which OKP Land Pte. Ltd. holds 51% and the remaining 49% is held by HSB Holdings Pte. Ltd., an unrelated third party.
The JV agreement is not available for review due to confidentiality restrictions.
What lessons have been learned from the PIE accident and fatalities?
There are lessons to be learnt as with any accident. Safety is always our top priority in our workplace, as we continue to focus on delivering projects and strengthening our order book. The Group will continue with its good workplace safety practices and also work on further developing a culture of safety by establishing safety and environmental awareness programmes.
Backed by over 50 years of track record and strong technical capabilities, the Group remains committed to securing new projects to add to its order book. At the same time, the Group will continue to cultivate long-term relationships with clients.
Is the provision of highway maintenance service considered by management to be a core business in which the group has a competitive advantage? How does the Singapore market for this services differ from other countries? Has the Group tendered to provide this service in any other countries?
The Group's core businesses are the construction and maintenance businesses. In FY2020, the maintenance segment accounted for 24.7% of the Group's revenue.
Highway maintenance projects in Singapore are usually offered through open tenders. The Group participates solely in the open tender category where public sector projects are usually awarded.
The Group has not tendered for any highway maintenance projects outside Singapore. Overseas projects are generally secured through invited tenders. For invited tenders, projects are secured through invitations by project owners or referrals by appointed consultants or business associates.
The Group is cautious in venturing into new territories and is mindful of the exposure to potential risks including political, credit and currency risks. The Group will look for overseas opportunities that can tap on its civil engineering and infrastructure expertise, whilst being careful in identifying the right and experienced local partners.
The Group will provide timely updates and keep shareholders informed if there are new developments.
Dear Evelyn Neo, you wrote:
More than half your gross profit comes from rental income, will you divest the construction and maintenance business?
The Group's core business and focus has always been in the construction and maintenance business. In FY2020, the Construction and Maintenance segments continue to be a strong revenue pillars and core businesses, accounting for 91.0% of the Group's total revenue.
In FY2020, there was a decrease of $3.9 million in gross profit from the Construction and Maintenance segments. The lower gross profit for the Construction and Maintenance segments was due mainly to the temporary cessation of construction activities in compliance with the government's COVID-19 measures.
Moving forward, the Group will continue to strengthen its capabilities in its core civil engineering business in order to maintain its status as a leading civil engineering contractor across various industries.
Dear Investors,
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.
Rgds,
The Management Team
OKP Holdings Ltd.