“Excluding its sizeable net cash balance of $115 million, OKP trades at just 6 times ex-cash P/E, or a deep 30% discount to its peers’ average of 13 times FY2025 P/E per Bloomberg, suggesting room for a valuation re-rating,” writes the team in their Sept 22 un-rated report.
Another point of strength is OKP’s orderbook. As at June, the group’s orderbook of $648 million provides earnings visibility to FY2031. In May, OKP also secured its largest-ever contract in the form of a $258 million project from the Land Transport Authority (LTA) to build the East Region cycling path.
On this, the team writes: “This positions OKP as a key beneficiary of LTA’s plan to more than double Singapore’s cycling path network from 530 kilometres in 2024 to 1,300 kilometres by 2030.”
Despite project recognition, the group’s pipeline remains robust. The UOBKH analysts see that the group is well-positioned to “ride” on the recovery of the construction sector, supported by public infrastructure spending. OKP’s “A1 grading” allows it to participate in public projects of “unlimited value”, add the analysts.
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At the same time, OKP has maintained a sizable net cash position since FY2023. As of 1HFY2025, the group’s net cash position increased 6.2% to $115 million, representing 44% of its current market cap.
“Such balance sheet strength provides ample buffer against sector cyclicality, enhances tendering ability for large-scale projects and leaves flexibility for selective acquisitions aligned with its core construction business. Shareholders continue to benefit as well, with payout and dividend yields increasing,” writes the team.
Meanwhile, the analysts point to “less capital-intensive” commuter faculty and cycling path projects supporting margins. Although OKP’s maintenance segment’s margins compressed to 9.5% on competitive pricing, the segment still provides “stable, recurring” cash flows, which sustains its market share.
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The analysts write: “Together with recurring rental income from its property investments, OKP has income stability across cyclicality. As OKP refocuses on its construction core competency, scale efficiencies, and disciplined tendering help sustain its competitiveness despite foreign entrants.”
Two share price catalysts noted by them include the group’s continued benefitting from the construction sector’s uplift and its financial resilience.
As at 11.09am, shares in OKP Holdings are trading 1 cent lower or 0.89% down at $1.11.
