Philip Capital Research said the group’s green energy and power solution business is also set to gain stronger traction.
PETALING JAYA: OCK Group Bhd
’s earnings are poised for a record-breaking year, supported by its RM220mil order book, positive outlook in telecommunications tower leasing, interest-cost savings and robust solar and digital solutions business prospects.
The near-term catalysts for the telecommunications infrastructure and services provider, include potential wins in for data-centre work and sizeable digital-solution contracts.
The group is actively pursuing data-centre projects valued at RM50mil or 7% of 2023 revenue, with a historical success rate exceeding 50%.
This is expected to bolster its data-centre order book of RM20mil, said Phillip Capital Research.
OCK also recently secured a 2.5MW net energy metering solar project, which is expected to start contributing in 2025.
According to the research house, the group’s green energy and power solution business is also set to gain stronger traction, driven by strategic initiatives under the National Energy Transition Roadmap, including the expansion of more solar farms.
The prospects for its digital-solutions business also look bullish, with ongoing bids amounting to RM400mil.
Phillip Capital Research gathers that a significant portion of the bid value includes a payment-system upgrade contract with artificial intelligence-based facial-recognition integration.
The successful contract award could provide further upside potential to the research house’s existing earnings forecast for OCK and add to its current order book of RM49mil.
Phillip Capital Research has maintained a “buy’’ rating on the stock with an unchanged target price of 85 sen a share.
The key downside risks to its rating include unforeseen delays in project deployment and execution and weaker-than-expected results and margins.
The research house said that it believes that OCK’s next major re-rating catalysts include securing contracts in the data centre, solar and digital-solutions business segments.
The research house also remains positive on OCK’s regional telecommunications-tower expansion plan, driven by the ongoing rollout of 5G both domestically and internationally.
The group stands to benefit from higher tenancy ratios in Malaysia, projected to rise from 1.5 times to 1.6 times, alongside the deployment of new sites under the dual 5G network initiative, said Phillip Capital Research.
OCK has secured a contract for 100 new sites in Laos from Best Telecom, with 60 of these sites slated for completion by 2025.
Best Telecom was recently awarded the 5G spectrum in Laos, and is reportedly planning to launch its 5G network across the country by year-end.
OCK will build and lease telecommunication towers to Best Telecom in Vientiane and other major cities over a 15-year period, ensuring long-term recurring income stream for the group.
In Vietnam, the recent allocation of new 5G spectrum to Viettel and VNPT is expected to further bolster tenancy ratios to 1.6 times, up from 1.4 times.
OCK has also entered into a three-year contract with DigitalEdge to maintain 3,000 telecommunications towers, expanding its total number of managed towers in its portfolio to 63,000.
