SINGAPORE (July 17): KGI says it is unlikely OKP will be absolved of any blame for the collapse of the uncompleted viaduct near Pan-Island Expressway in last Friday.
See: OKP calls for trading halt as share price retreats after PIE collapse
The collapse resulted in one worker’s death and several others injured at the worksite. OKP is the main contractor working on the viaduct. Construction works at the work site has been suspended as a full investigation on the cause of accident is currently underway.
Preliminary investigations indicated the support structure for one portion of the uncompleted viaduct collapsed during concrete works by OKP.
In a Monday report, analyst Colin Tan says although there is no impact on OKP’s existing order book, it could affect future order wins.
“Though the actual cause of the accident is still being investigated, it is unlikely that OKP will be absolved of any blame,” says Tan.
OKP was previously penalised for a safety lapse that had led to another worker’s death in 2015, and was debarred from employing new workers for a period of three months.
Coupled with the pending investigation of this latest workplace safety breach, this could affect OKP’s chances of winning major upcoming public road construction projects as safety records could be taken into consideration in the tender process.
Ongoing works on the viaduct project has been put on hold and this has dampened UOB’s expectations of topline growth this year.
A possible impairment charge due to the viaduct collapse is likely to further hurt FY17F earnings and dividends.
As a result, KGI has lowered its target price forecasts to 39 cents from 52 cents and downgraded its recommendation to “hold”.
Shares in OKP are down 3 cents at 37 cents.
