OKP

OKP announced a record 2Q10 net profit of S$4.3m (up by 18% yoy) on the back of $39.8m (up 25% yoy). The main growth driver came from its Construction segment (+42% yoy) which saw a higher percentage of revenue being recognised from a few large construction projects that were underway in the 1H10. This segment accounts for 84% to the total revenue while the rest was made up by the Maintenance segment with 16%.

Subsequently, it also saw an improvement in its GPM from 15.6% to 16.8% in the 1H 2010 mainly because some key construction projects were able to command better GPM. The group has a strong balance sheet with net cash position of S$85.0m (or 31.0 cents per share). This works to about 65% of the Group’s market cap. Mgtm has declared an interim dividend of 1.0 cent per share, representing a payout ratio of 34%.

To date, the Group’s order book stands at S$312.0m based on secured civil engineering and construction contracts, with some projects lasting up to 2013. The stock currently trades at 7.7x FY10 and 6.3x FY11 PER.