Question on OKP - are you worried that they're over-earning on gross margins? They're basically at 20 year highs (besides 2011's 39%). The 20-year range is 7% to 39%. I get that the backlog is great and upcoming government tenders will continue to be good, but I wonder how to think about the sustainability of gross margins. Thanks.
Thanks for the question. I think their recent H1 2025 result provided some validation that the high margins continue, driven by increased productivity and higher cycling path work in the mix.
Current backlog consists mainly of cycling path type of work, which likely means margins remain around this level in the coming years. The company has commented last year that margins currently are high and are expected to come down in the future, but the more traffic-related work they sell the lower and later that effect will appear. Since then they have sold a lot of traffic-related work.
The key part of my thesis that has not played out yet is the massive incoming demand in line with the LTA's plans. I'm particularly interested in tender AM207 (LTA000ETT24000132), which I expect will more or less double OKP's backlog and make them a more established construction company for cycling paths but also for other multi stake holder construction work.
Interestingly, the new contracts are being awarded on a lump sum basis, rather than time and material basis. This would suggests margins might actually further increase, as lump sum government contracts generally have much higher margins. The company has not shared a perspective on this as tendering is ongoing, but that might be a positive effect to maintain or grow margins.
Hi Artem I don’t recommend stocks but recommend you have a look at Matsa or at DBA group or BSH. I like all of the companies in my portfolio of course! Good luck investing!
Congratulations on constructing such a successful portfolio, Floebertus! Your picks are intriguing since they're 'off the beaten path,' and that's often where the best value is.
In the future, will you be doing more deep dives into each individual stock? You've provided a nice summary of each one above, but it would be great to know more about the company and your rationale for buying it.
Thanks a lot Benjy! We write longer articles about stocks we like or about key events impacting the stocks we own. They might be new or existing stocks in the future, kind of depends what makes most sense depending on conviction level. If you have any questions about particular stocks feel free to drop them in the group chat. Cheers
Thanks Flo for the update!
Question on OKP - are you worried that they're over-earning on gross margins? They're basically at 20 year highs (besides 2011's 39%). The 20-year range is 7% to 39%. I get that the backlog is great and upcoming government tenders will continue to be good, but I wonder how to think about the sustainability of gross margins. Thanks.
Thanks for the question. I think their recent H1 2025 result provided some validation that the high margins continue, driven by increased productivity and higher cycling path work in the mix.
Current backlog consists mainly of cycling path type of work, which likely means margins remain around this level in the coming years. The company has commented last year that margins currently are high and are expected to come down in the future, but the more traffic-related work they sell the lower and later that effect will appear. Since then they have sold a lot of traffic-related work.
The key part of my thesis that has not played out yet is the massive incoming demand in line with the LTA's plans. I'm particularly interested in tender AM207 (LTA000ETT24000132), which I expect will more or less double OKP's backlog and make them a more established construction company for cycling paths but also for other multi stake holder construction work.
Interestingly, the new contracts are being awarded on a lump sum basis, rather than time and material basis. This would suggests margins might actually further increase, as lump sum government contracts generally have much higher margins. The company has not shared a perspective on this as tendering is ongoing, but that might be a positive effect to maintain or grow margins.
I am subscriber for 10 minutes already;)
What do you recommend to buy today? Thank you!
Hi Artem I don’t recommend stocks but recommend you have a look at Matsa or at DBA group or BSH. I like all of the companies in my portfolio of course! Good luck investing!
Thanks
Congratulations on constructing such a successful portfolio, Floebertus! Your picks are intriguing since they're 'off the beaten path,' and that's often where the best value is.
In the future, will you be doing more deep dives into each individual stock? You've provided a nice summary of each one above, but it would be great to know more about the company and your rationale for buying it.
Thanks a lot Benjy! We write longer articles about stocks we like or about key events impacting the stocks we own. They might be new or existing stocks in the future, kind of depends what makes most sense depending on conviction level. If you have any questions about particular stocks feel free to drop them in the group chat. Cheers
Thanks for letting me know!
Hey flo . Thanks for this , do you provide any updates on your position sizing in any of these . All look cheap , what would be a high conviction bet
Hi yr, they are in order of their size so that probably gives you a good idea of relative conviction for each!