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Singapore's infrastructure upcycle is in full swing, and OKP Holdings has emerged as one of the interesting beneficiaries. |
This cheap valuation comes despite the company sitting on a record net construction order book of S$627.2 million, heavily weighted toward government clients like the Land Transport Authority (LTA).
 "On an ex-cash basis... OKP trades at roughly 5.1x FY2026E earnings, a notable discount for a company with 21.6% ROE, a 2.8x net construction order book-to-revenue ratio, and multi-year earnings visibility."-- Jaimes Chao, analyst, Tickrs |
This backlog provides earnings visibility stretching out to 2031.
A major growth vector has been the government's push for 1,300 km of cycling paths by 2030, a niche where OKP has already secured S$618 million in contracts.
The Great Margin Debate: Super-Normal vs. Reversion to Mean
Both Lim & Tan Securities and Tickrs Financial rate the stock a "BUY" with target prices of S$1.03 and S$0.930 respectively.
In FY25, OKP achieved an eye-opening gross margin of 38.4% in its construction segment.
Lim & Tan is highly optimistic, projecting that OKP can sustain "super-normal" blended gross margins of 32.4% into FY26 due to good execution and strong pricing power.
Conversely, Tickrs forecasts a blended margin of 31.2%.
Tickrs highlights that the maintenance segment saw margins squeeze drastically from 30.7% to 17.3% in FY25 as projects entered more capital-intensive phases.
Hidden Optionality and Dividend Upside
Beyond the core civil engineering business, OKP possesses real estate optionality.
 "OKP’s ability to sustain margins above 30% is a testament to its selective tendering strategy, in-house capabilities, and the predominantly public-sector nature of its project base, which carries lower counterparty risk and more predictable payment schedules."-- Nicholas Yon, analyst, Lim & Tan Securities |
The company actively recycles capital and recently completed the disposal of its Kampong Bahru shophouses in March 2026.
This impending capital gain and cash influx sets the stage for a potential special dividend surprise in the next 12 months.
Already, management has demonstrated a shareholder-friendly approach, hiking the FY25 dividend by roughly 40% to 2.0 cents per share (post-bonus share issue).
Despite this hike, the payout ratio remains conservative at just 24.3%, meaning the dividend is sustainable and has ample room to grow even relying solely on the company's cash hoard.
Tickrs: "We estimate that OKP could sustain its current dividend level for over 12 years on cash reserves alone, without any further earnings."
The risk-reward profile for OKP Holdings appears skewed to the upside. |
Alongside OKP is a bunch of Singapore construction companies listed on HKSE that are riding the construction boom but trade at big discounts to their Singapore-listed peers.
If OKP trades at 5X ex-cash, HPC Holdings is 1.3X ex-cash.
More striking is Kwan Yong Holdings, whose net cash exceeds its market cap.
As highlighted in an earlier article, Singapore’s Construction Boom Is "Supercharged"—Why Aren't These Stocks Re-rated?, the companies are:
|
Company |
Stock price (HK$) |
Market Cap (S$) |
Net Cash* |
Order Book** |
P/E Ratio |
|
HPC Holdings |
0.225 |
$59M |
$49M |
$1.37B |
7.7x core; 1.3x |
|
Kwan Yong Holdings |
0.50 |
$65M |
$88M |
$715M |
5.0x |
|
CTR Holdings |
0.177 |
$40M |
$67M |
$386M |
3.5x |
|
Chuan Holding |
0.29 |
$60M |
($22M) |
$453M |
4.8x |
|
*Excludes contract liabilities, which are advances from clients at last reported period |
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