Listed since 2014, OCK is the largest telecommunication services provider in Malaysia, offering full turnkey contracting and managed network services, and construction services for solar farms. Today, OCK has a telecommunication tower portfolio of more than 4,300 units located in Malaysia, Myanmar, and Vietnam as well as 17 solar farms in Malaysia. The group derived 90.7% of its FY2020 revenue through telecommunication network services (TNS) divisions, 6.1% through green energy and power solution (GNP) whereas trading, and M&E engineering services accounted 3.2%.

Being the largest telecommunication service provider in Malaysia, OCK is set to benefit from the government’s National Digital Infrastructure Plan (JENDELA), which aims to expand the 4G network coverage in the country for 5G technology. To recap, government introduced the 1st phase of JENDELA in mid-2020, aiming to expand the 4G mobile broadband coverage from 91.8 percent to 96.9 percent by 2022 through building new towers and upgrading existing towers (#Figure1). As telcos strive to meet the JENDELA targets in 2021- 2022, OCK’s growth in TNS will likely be driven by the deployment and the maintenance of more infrastructures to achieve JENDELA’s aspiration of nationwide coverage.

In addition, the recent appointment to Ericsson from Digital Nasional Berhad (DNB) for the roll out of Malaysia’s 5G network is deemed to benefit OCK given its long established relationship with Ericsson. On the other hand, as OCK continues to expand its green energy segments through acquisitions of solar farms, we reckon this will bring new income stream to the group topline in order diversify the overall group business risk.

OCK is currently trading at an undemanding 15.8x FY22 P/E (50% discount against its peers’ average of 31x and 24.7% lower than its 5-year average of 21x). Technically, OCK is pending for U-shaped rebound. A strong breakout on its neckline RM 0.49 will spur the price toward RM 0.52- 0.54 levels. Cut loss at RM 0.44

Source: Hong Leong Investment Bank Research - 14 Sept 2021