Q1 profit at OKP dragged down by property ventures

Profit at mainboard-listed construction player OKP Holdings took a hit in the first quarter stemming in part from the company's move into real estate development.

Net profit plunged 62.4 per cent year on year to $1.07 million for the three months to March 31, it reported yesterday, and revenue fell 16.8 per cent to $19.2 million.

OKP's fledgling property investment arm posted a surge in revenue gains in the quarter on rental income from a Perth office tower bought in April last year and that is now 68 per cent occupied.

But contributions from the core construction segment, which makes up almost two-thirds of turnover, slipped 5.4 per cent on lower revenue recognised from projects that were almost completed as well as those that had been newly awarded in the quarter.

Turnover from maintenance was nearly halved due to lower revenue recognised from new projects.

OKP also recorded a share of losses from associates and joint ventures to the tune of $531,000 compared with an earlier profit.

The group's bottom line was hit by losses at 22.5 per cent-owned associate Chong Kuo Development, which is developing The Essence in the Upper Thomson area, and 25 per cent-owned USB Holdings, which is redeveloping the Phoenix Heights collective-sale site.

The Essence was launched in March while OKP said the Phoenix Heights project "is also on track", with a fresh 99-year extension on the land lease.

Earnings per share fell to 0.35 cent, from 0.92 cent earlier, while net asset value was 39.89 cents a share, against 39.49 cents as at end-December last year.

No dividend was recommended, unchanged from the same period in the year before.

Managing director Or Toh Wat noted: "We will direct our team's efforts to sharpen our competitive edge in our core civil engineering business while improving productivity and efficiency."

OKP was described as "cautiously optimistic of healthy industry prospects in the near to medium term", with an order book of $291.6 million until 2023.

A version of this article appeared in the print edition of The Straits Times on May 07, 2019, with the headline 'Q1 profit at OKP dragged down by property ventures'. Print Edition | Subscribe