Of course take P1, at least you get a seat for your kid. Then you can equip him better to apply for DSS/private school again next year. Repeating P1 is more useful than K3 as he can learn more. If he stays in K3, it's too risky. He cannot enrol in P1 central allocation again and if he cannot be admitted by DSS/private next year, you'll need to wait until the very end that EDB will give you a seat which is left and it's even worse than this year.