Strong order book of S$307.3m. We learnt that OKP has been kept busy with numerous public sector construction projects, having won contracts from several Singapore government agencies. As of 11 May 2009, the group has a strong order book of S$307.3m till 2011, of which 90% are from government-related bodies (e.g. LTA, PUB, HDB) and 10% are from private sector (e.g. ExxonMobil). With such good paymasters, OKP said that it has been able to keep its receivables days within 42 days.

Cash position likely to improve. We also understand that OKP continues to maintain positive operating cash flows and build its cash position. In April 2009, the group entered into a strategic partnership with China Sonangol International (CSI) by placing shares to the latter (10% of share capital). With these proceeds of S$6.7m and the group's internal cash generation, its net cash position of S$43.5m (57.4% of market cap), as of 31 March 2009, is expected to improve in the coming quarter.

Growth opportunities. According to management, this partnership with CSI not only presents growth opportunities in the Oil and Gas sector but also in overseas market. We note that CSI is part of an overseas conglomerate that specializes in Oil and Gas, minerals investment, explorations and national infrastructure construction projects, with exposure to countries such as Zimbabwe, Africa.

Healthy quarterly results despite downturn.In its most recent 1QFY09 results, OKP posted a 3.7% YoY growth in revenue to S$29.6m and 32.2% YoY increase in earnings to S$3.2m. Net margin also improved to 10.7% from 8.6% in 1QFY09. While management noted that OKP has no formal dividend policy, it has historically maintained a 30% dividend payout. Its FY08 cash dividend of S$0.02 (4.3% yield), for example, represents a 31.6% payout.