Company Name: OKP HOLDINGS LIMITED
| Research House: DBS Vickers | Price Call: BUY | Target Price: 0.80 |
DBS Vickers has maintained its buy call for OKP Holdings and its target price of $0.80 as orders continue to flow.
Last week, OKP announced its 7th contract win this year -- a $46.8m contract from PUB to improve the Alexandra Canal between Zion Road and Kim Seng Road.
With this order win, OKP has won about $152 million worth of contracts YTD in 2011, and has almost met DBS Vickers’ FY11 new order win assumption of $170 million within the first 8 months of the year.
“We estimate current net outstanding orderbook of over $250 million, which underpins our FY11F earnings while securing more than 60% of our FY12F revenue. Net book-to-bill ratio stands at ~1.8x,” says the brokerage house.
Other business opportunities are also emerging for OKP. Major shareholder China Sonangol has recently agreed to buy another 15 million vendor shares of OKP Holdings at a premium to the market ($0.66 per share), bringing its stake up to 14% and further strengthening its commitment to OKP as a partner.
China Sonangol has shown serious intent in the Singapore property market through its ongoing Angullia Park project and the Amber Towers en bloc acquisition in April 2011, creating more business opportunities for OKP in building construction contracts as well as potential investment avenues.
To date, OKP has outperformed the STI to date. OKP has around $97 million net cash on its books ($0.32 per share or 56% of its current market cap). The surplus cash hoard allows the company a buffer against any adverse market conditions, return part of it to shareholders as dividends, potentially acquire complementary businesses and/ or invest in related fields like property development.
“We estimate 5 cents total DPS in FY11/12F (including special dividends). Even if OKP were to pay out only 3 cents, that still translates to a decent 5.3% yield at current price,” says DBS Vickers.
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