PETALING JAYA: OCK Group Bhd
earnings are poised for a record year in 2024, supported by its RM220mil order book and positive outlook for tower leasing.
Phillip Capital Research, which maintained a “buy” recommendation with a target price of 85 sen, said the company is expected to fare better on the back of interest cost savings and good solar and digital solution prospects.
It added that OCK is likely 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.
According to Phillip Capital Research, the recent allocation of new 5G spectrum in Vietnam to Viettel and the Vietnam Posts and Telecommunications Group is expected to further bolster tenancy ratios to 1.6 times (up from 1.4 times).
OCK had entered into a three-year contract with DigitalEdge to maintain 3,000 towers, expanding its total number of managed towers under portfolio to 63,000.
The research house remained positive on OCK’s regional tower expansion plan, driven by the ongoing rollout of 5G both domestically and internationally.
Recently, OCK secured a contract for 100 new sites in Laos from Best Telecom, with 60 of these sites slated for completion by 2025.
Phillip Capital Research said OCK’s next major re-rating catalysts include securing contracts in data centre (DC), solar, and its burgeoning digital solutions business.
“The group is actively pursuing DC projects valued at RM50mil or 7% of 2023 revenue), with a historical success rate exceeding 50%.
“This is expected to further bolster its DC order book of RM20mil,” it added.
The company had recently secured a 2.5MW Net Energy Metering solar project, which is expected to start contributing in 2025.
“The prospects for its digital solutions business look bullish, with ongoing bids amounting to RM400mil.
“We gather that a significant portion of the bid value include a payment system upgrade contract with artificial intelligence-based face recognition integration.
“The successful contract award could pose further upside potential to our existing earnings forecast and add to its current order book of RM49mil,” the research house said.
It cautioned that key downside risks include unforeseen delays in project deployment and execution and weaker-than-expected results and margins.
