Daily Brief Singapore: Mandarin Oriental International, OKP Holdings, Hor Kew Corp and more

• Shift to Asset-Light Model: Mandarin Oriental is strategically pivoting to an asset-light model, focusing on lucrative hotel management and branding fees while selectively disposing of owned assets, such as its Paris property. This transition aims to enhance financial flexibility and accelerate growth.
• Aggressive Expansion Pipeline: The Group has a robust growth strategy, aiming to more than double its portfolio over the next decade from its current 41 hotels. The pipeline is geographically diverse, with a strong focus on key capital cities and resort destinations in the Middle East, Japan, North America, and Europe.
• Resilient Post-Pandemic Recovery: The company is demonstrating a solid recovery, with a 13% increase in combined total revenue and a 15% growth in hotel management fees in its latest results, driven by strong RevPAR (Revenue per Available Room) increases across all regions. This signals robust demand for luxury travel and the power of the Mandarin Oriental brand.

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• OKP Holdings is a leading Singapore-based infrastructure and civil engineering company with a strong reliance on public sector projects, complemented by a growing maintenance business and rental income from investment properties.
• The company has demonstrated a significant financial turnaround, with robust revenue growth and a substantial improvement in profitability in FY2024, driven by higher-margin projects and effective cost management.
• Fueled by a strong order book of S$600.7 million providing revenue visibility until 2027 and a favorable outlook for Singapore’s construction sector, OKP is well-positioned for sustained growth, though it remains exposed to the cyclical nature of the industry and potential project delays.

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• Hor Kew is strategically pivoting towards higher-margin projects, evidenced by a significant increase in profitability in FY2024 despite lower revenue. This focus on operational excellence and cost control is a key driver of recent performance.
• The company is positioned to benefit from a robust, multi-year upswing in the Singapore construction sector, fueled by a backlog of public housing and over S$100 billion in mega-infrastructure projects scheduled to last into the next decade.
• Despite strong recent growth and a positive industry outlook, the company trades at a significant discount to intrinsic value and peers, with a P/E ratio under 2x and a P/B ratio below 0.3x, suggesting a potential valuation disconnect.

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