Monday, April 14, 2014

A look at OKP

OKP is one of the worst performers in my portfolio currently. Just what exactly happened to the stock over the past year? I took a look at its recent annual report to find out.

In terms of top line performance, things doesn't look that bad. Revenue had in fact grown by about 20% to $128m. But as we look closer at its profit, we realise that its profit margin has shrunk close to 250% from 17.4% to 6.9%. Gross profit is but $12.5m, down from $23m a year ago. EPS is down to 1.6c from 4c previously. DPS is down to 0.3c from 1.5c. 

In terms of overall balance sheet, I think the company is still fundamentally sound with a debt to equity ratio of about 2.8%. It's still net cash if we look at its cash holdings. Hence on the whole I'm not too bothered by its overall financial status. 

I think the doldrums that OKP is currently in is mainly due to the rising manpower costs eroding a large part of their margins. This is further worsened by the large order books that the company has previously committed. Moving forward, it would hopefully get better as they are able to factor in the increased cost into their new contracts. 

Will I buy more to average down? Maybe. Since the stock is currently trading at close to its NAV of 30c per share. I'm not totally satisfied by its meagre dividend yield of about 1% currently. I will likely monitor for awhile before deciding on whether to add more to my existing holdings.


3 comments:

  1. You should ask yourself why you even buy this counter in the first place.

    Regards,
    SG Wealth Builder
    www.sgwealthbuilder.com

    ReplyDelete
    Replies
    1. Hi Gerald,

      Of course on hindsight, I probably would not have bought it at my initial purchase price. But I guess that's how it is with investing, we don't know what will happen until it actually happens.

      Cheers

      Delete
  2. My question is a first order question and if you yourself cannot even answer it satisfactory, then I must say you don't have the right approach to investment. You need to do the research before you even buy and most importantly, ask yourself, why this stock?

    Regards,
    SG Wealth Builder
    www.sgwealthbuilder.com

    ReplyDelete

Link Within

Related Posts with Thumbnails