OKP

OKP: Higher than expected profit figures. 2Q rev at $28.3m is -28.8% yoy -13.8% qoq but gross profit at $11.2m +69.6% yoy +27.3% qoq. Net profit was up 60.7% yoy +31.6% qoq at $6.9m due to a higher gross margin. Co attributes higher gross margins to cost savings from non-recurrent design-and-build construction projects and does not expect this going forward.

Construction rev formed 85.2% of total rev a decline of 30.6% yoy attributed to completion of existing projects and lower recognition of rev from newer projects. Of note, OKP has a net cash position of $97m approx 49% of current mkt cap of $197.9m Co's order book is approx $381.6m to be completed by 2014 and has secured 5 public sector projects totaling $100.3m YTD

Expects a positive though competitive outlook with a govt pipeline for committed large public infrastructure projects such as MRT line extension including the Downtown Line and major road works such as the North South Highway. 2Q11 EPS at 2.43c with annualized 1H2011 P/E at approx 7.6x. An interim div of $0.01 per share has been declared for 1H2011. Peer Hock Lian Seng trades at 5.9x trailing P/E. CIMB maintains Buy at TP$0.98