OKP Holdings Limited (5CF) Earnings Call Transcript & Summary

Dear shareholders and stakeholders, we are pleased to take you through key highlights of our FY 2025 results and recent corporate developments. Despite ongoing macroeconomic challenges, the group delivered a strong performance in FY 2025. We continue to build on our strong track record in construction and maintenance to capture new growth opportunities. Our performance this year was supported by the steady progress of existing projects alongside newly awarded contracts. At the same time, our expansion into property development and investment in (sic) [ since ] 2012 continues to provide a stable stream of recurring rental income. Looking ahead, we remain focused on building a resilient and sustainable business anchored by disciplined execution and strong project delivery. We continue to prioritize that align with our core competency in infrastructure and civil engineering. Our construction and maintenance businesses are supported by the public sector. In the public sector, we continue to work closely with key government agency, reflecting our strong track record and trusted relationship built over the years. In FY 2025, we continue to diversify our earnings base and strengthen our recurring income stream through our property development and investment portfolio. Our portfolio of three freehold properties in Singapore held for investment purposes, namely 35 Kreta Ayer Road and adjoining 2-story conservation shop houses, 69 and 71 Kampong Bahru Road have also contributed positively to the group performance in FY 2025. Our investment property in Australia continues to a stream of recurring rental income for the group. The group continues to manage the asset with a focus on value preservation and income stability. The ongoing improvements are anticipated to strengthen the property long-term value while also increasing its potential for higher rental income and attract new tenants in the future. The group continues to be supported by a healthy pipeline of projects. In FY 2025, we secured two public sector contracts amounting to approximately $280.9 million, further strengthening our order book. This includes infrastructure work at CleanTech Loop Phase 2A within Jurong Innovation District as well as the construction of New Cycling Park Networks across multiple towns in the East region of Singapore. The scope of work covers road construction, drainage and civil works and pedestrian and cycling path enhancement. Together, the projects strengthened the group order book and underscore our strong track record in civil engineering expertise. In FY 2025, the group achieved record revenue of $223.5 million, up 22.9%, boosted by higher contribution from the construction and maintenance segments. The increase in revenue was largely due to a 35.6% and 6.2% increase in revenue from the construction segment and maintenance segment, respectively, and partially offset by a 43.7% decrease in the group rental income. Gross profit margin improved by 0.4 percentage points to 32.4%, driven by stronger margin in our construction segment, supported by higher contribution from several projects that better margins. This improvement was partly offset by softer margins in the maintenance segment as a number of projects progress into more active phases where costs tend to be higher. Net profit attributable to equity holders for FY 2025 was $44.3 million, a 31.3% increase from $33.7 million in FY 2024. The group balance sheet remains strong with free cash and cash equivalent of $155.9 million as at 31st December 2025, up from $124.3 million a year ago. Additionally, our healthy construction order book stands at $588 million as at 31st December 2025 with projects extending till 2031. The construction segment represents 69.1% and was a main contributor of the group 2025 revenue. The maintenance segment represents 29.4%, while rental income contributed 1.5% to the group total revenue in FY 2025. Revenue from construction and maintenance segments increased to $154.5 million and $65.6 million, respectively, in FY 2025. This was driven by a higher percentage of revenue recognized from ongoing and newly awarded construction projects as they move into more active phases in FY 2025. Rental income generated from investment properties decreased to $3.4 million due to ongoing major renovation at 6-8 Bennett Street, East Perth, Western Australia. And the transition period following tenant departures during FY 2025 (sic) [ 2024 ]. Rental income was boosted by our investment property at 35 Kreta Ayer Road and 69 and 71 Kampong Bahru during FY 2025. The group gross profit surged 24.5% to $72.4 million in FY 2025 from $58.2 million in FY 2024. Net profit also saw a 33% increase to $43.6 million from $32.8 million the year before. For FY 2025, to reward all our loyal shareholders for their continuous support, the Board has recommended a higher quantum of total dividends declared. Following the recent proposed bonus issue of 3 bonus shares for every 4 existing ordinary shares. The Board has proposed a final one-tier tax exempt dividend of $0.07 per ordinary share. In addition, the Board has recommended a special dividend of $0.013 per ordinary share to further enhance shareholder value. This proposed dividend payable on 26 May 2026, subject to the approval of shareholders at the upcoming Annual General Meeting, represent a dividend yield of 2.3% based on the share price of $0.86 on 24 February 2026. Business, with public sector projects remaining as our key contributor. As at 31st December 2025, we are supported by a net order book of $588 million, providing a clear earnings through to 2031. The next 4 slides provide a quick snapshot of our ongoing and recently completed projects, all from the public sector. For property development, the 74-unit Phoenix Residences in Bukit Panjang attained a TOP on 3rd January 2025 and CSC obtained on August 2025. The group owns a pair of freehold 2-story conservation shophouses located at 69 and 71 Kampong Bahru Road. During FY 2025, the group proposed the sale of this property for an aggregate consideration of $14.88 million. The sale was undertaken in the ordinary course of business. The group also owned a freehold 3-story shophouse situated at 35 Kreta Ayer Road acquired in January 2021. The property continued to generate a stable stream of recurring rental income. In Australia, the group owns a freehold office complex on Eastern fringe of Perth CBD at 6-8 Bennett Street. Overall, rental income from both Singapore and Australia contributed 1.5% to the group income in FY 2025. Looking at the broader operating environment, Singapore economy continued to perform well in 2025. Based on the figures released by the Ministry of Trade and Industry, MTI on 10 February 2026, Singapore economy expanded by 5% in 2025, easing from the 5.3% growth in 2024. MTI has upgraded Singapore GDP growth forecast from 1% to 3% to 2% to 4% for FY 2026. The construction sector expanded by 4.6% year-on-year in the fourth quarter of 2025, moderating from the 5.6% growth in the third quarter. For the whole of 2025, the sector expanded by 5.2% after growing 5.4% in 2024. For 2026, the Building and Construction Authority, BCA, expect construction demand to remain steady at between $47 billion and $53 billion, similar to 2025, supported by the upcoming projects such as Changi Airport Terminal 5 development and Marina Bay Sands Integrated Resort expansion. Over the medium term, BCA expect construction demand to average between $39 billion and $46 billion per year from 2027 to 2030, supported by a strong pipeline of large developments, project schedule may still change due to unforeseen global economic risk. Looking ahead, the group will continue to focus on operational discipline and execution. We will further leverage technology and innovation to enhance productivity, strengthen our competitive edge and manage cost pressures. Safety remains a core priority. The group will continue to reinforce a strong safety culture through proactive measure and collective responsibility to ensure a safe working environment for our employees. At the same time, we remain committed to environmental sustainability in line with Singapore Green Plan, and we will continue to integrate sustainable practices across our operations as we grow responsibly. On behalf of the Board, I would like to express my sincere appreciation to our shareholders, business partners and suppliers for their continued trust and support. I would also like to thank our management team and all colleagues for their dedication and commitment to the group. With the continued support of our stakeholders, we are confident in our ability to navigate prevailing market conditions and deliver sustained value as we chart our path forward. Thank you.