OKP stands by ‘big cash pile’ strategy despite $588m order book security

The board argued that cash reserves are a structural requirement of the business.

A shareholder has pressed OKP Holdings Limited on what they described as its persistently "big cash pile," questioning whether the company is doing enough to boost returns — even as the board defended its conservative balance sheet as an operational necessity.

"I know you've consistently kept a big cash pile to show to government agencies that you won't go under," the shareholder wrote in questions submitted to the board.

"But how much does this cash pile really need to be? I'm wondering if you can do more things that boost shareholder returns, like buybacks, etc., which you've not done."

The board, responding through group managing director Or Toh Wat, argued that cash reserves were not simply idle funds but a structural requirement of the construction business.

"A contractor that cannot demonstrate sufficient financial capacity may not be invited to bid on the larger projects," the board said.

It added that it had already made its cash work harder by transitioning reserves from standard bank accounts into a tiered portfolio of short-term deposits and cash equivalents.

On share buybacks specifically, the board stopped short of committing to any near-term action, saying only that it would "from time to time carefully evaluate capital management initiatives that enhance shareholder value."

SIAS, the Securities Investors Association (Singapore), also probed the durability of OKP's order book and its heavy exposure to one specific contract category.

OKP reported a 22.9% jump in revenue to $223.5m for the financial year ended December 2025, with its net construction order book standing at $588m and extending through to 2031.

Moreover, the shareholder also turned a critical eye to OKP's diversification into property, particularly its commercial office investments in Perth, Western Australia, which have underperformed relative to its Singapore residential activities.

"It does look like your property investments aren't playing off well, particularly in Australia," the shareholder said, suggesting the company might be better placed pivoting into student or worker accommodation.

The board acknowledged that rental income from its Perth property at Benett Street had been dented by major ongoing renovations and tenant departures in 2024, but said it expected occupancy and income to recover once the works were completed.

It firmly rebuffed the suggestion of a more aggressive push into worker dormitories, saying its priority is to allocate resources to areas where it has established expertise.