OKP

OKP: Announced 4Q11 results which saw bottom-line exceeded estimates, with rev at $23.2m, -22% yoy and -9% qoq, while net profit at $9.5m, +105% yoy and +93.9% qoq. Gross margins surged at 65% vs 34% yoy. Result brings FY11 rev to $109.8m, -22% yoy and net profit at $26.6m, +57% yoy.

Decrease in rev was due mainly to the higher degree of completion of existing projects, coupled with a lower percentage of rev recognised from a few newly-awarded projects, gross margins however surged due mainly to cost savings in certain design-and-build construction projects, which yielded higher gross profit margins, and better project mgt and tighter cost controls.

Going forward, grp remains positive on outlook, based on the fairly healthy outlook of the construction industry over the next three yrs, however, with the expected slowdown in the economy, grp anticipate that the competition will become more intense.

Cite further that Ministry of Trade and Industry has projected a lower overall GDP growth of between 1 and 3% for 2012, although BCA expects the overall construction demand to remain strong at between $21b and $27b for 2012. Public sector construction demand is expected to contribute between $13b and $15b worth of construction orders.

A few road-related projects is also likely to be awarded in 2012 include the expansion of KPE/ TPE Interchange; the extension and reconstruction of Newton Flyover; and the construction of the New Lornie Road. Meanwhile, PUB would spend $750m over the next five years on 20 drainage projects.

We note that overall, grp’s fundamentals remain strong with a net cash position of $91.4m, or $0.3/share. Grp’s orderbook at $248.6m, underpinning earnings visibility till 2013. Grp is proposing a final div of 2c/share , bring FY11 div to 3c/share of a 4.6% yield. At current price, grp trades at 7.3x P/E, and 3.9x Ex-Cash P/E.

Ratings as follow:
CIMB maintains Buy with $0.97 TP.