Summary

• OCK Group Bhd (OCK) 2QFY22 core net profit gained 15.8% YoY to RM8.0m, driven by higher contribution across all business segments. Revenue for the quarter added 22.1% YoY to single quarter record high at RM142.2m.

• For 6MFY22, cumulative core net profit climbed 9.4% YoY to RM15.4m. The reported earnings make up to 44.6% of our core net profit forecast of RM34.6m and 44.9% of consensus forecast of RM34.4m. We deem the reported figures to be in line, given that 1H results are seasonally weaker with major telco players traditionally ramp up their under-utilised budgeted capex towards the end of the year.

• As at end-2QFY22, OCK owns and manages over 4,800 telco sites (3,000 sites in Vietnam, 1,200 sites in Myanmar and 600 sites in Malaysia) that will provide stream of recurring income over the long term. We note that towerco expansion is largely on track with OCK aims to register more than 5,000 telco sites (targeting 3,200 sites in Vietnam, 1,300 sites in Myanmar and 800 sites in Malaysia) by end-2022.

• OCK remains committed in the delivery of order book of more than RM280.0m, mainly from the JENDELA programme in bid to expand 4G coverage. At the same time, OCK will leverage onto the requirement of 3,000-4,000 telecommunication sites to cater for the 5G deployment. Digital National Bhd now plans to ramp up 5G coverage to 38.0% of populated areas which will include parts of Johor, Penang, Sabah, Sarawak, Selangor, Negri Sembilan, Melaka and Perak.

• Elsewhere, OCK also aims to drive the tenancy ratio across Myanmar and Vietnam by deploying more aggressive marketing strategy. Although the political unrest in Myanmar appears to remain unsettled, the towerco expansion will see minimal interruption on the delivery of 100-150 outstanding sites. Meanwhile, OCK has identified 800 telecommunication towers to be acquired in Vietnam.

• To reduce the reliance on telecommunication network services segment, OCK continue to participate in large scale solar projects under the government initiatives. For now, OCK is operating 17 solar farms with a combined capacity of 11.3MW in the green energy segment.

Source: Mplus Research - 30 Aug 2022