A  recent  meeting  with  OCK’s  new  CEO  and  updates  on  its  plans reaffirms  our positive view on  the  company.    Investors are advised to BUY  on  current  weakness.  Maintain  MYR1.06  TP  (18.5x  FY15F  EPS, 26.2%  upside),  which  is  supported  by  a  commendable  2-year  EPS CAGR  of  52%.  The  recent  Main  Board  transfer  and  impending announcement of its Myanmar venture are re-rating catalysts.

Strengthened  management  team  to  drive  new  leg  of  growth.  We view  positively  the  recent  appointment  of  Dr  Yap Wai  Khee  as  OCK’s new  CEO  given  his  vast  experience  in  overseeing  telco  assets  in emerging markets  under the  Axiata Group (AXIATA MK, NEUTRAL, TP: MYR7.20)  and strengthening  management execution.  Prior to taking up the  position,  Dr  Yap  was  the  chief  strategy  officer  for  Robi  Axiata  in Bangladesh.  We believe his  insights, given that he was also previously the CEO of Cambodia’s Mfone Co Ltd and Axiata’s head of strategy, will be especially useful as OCK  expands  into  new markets  like  Myanmar. OCK  founder/managing  director  Sam  Ooi  will  continue  to  be  in  the driver’s seat, spearheading the group’s domestic and regional strategy. 

Closing  in  on  Myanmar  deal.  We  understand  from  management  that the  70:30  joint-venture  (JV)  with  a  local  partner  to  penetrate  into  the lucrative tower business has been finalised and should be concluded by 2Q15. OCK is set to benefit from the explosive growth in tower demand with Telenor (TEL NO, NR) slated to award a remaining 3,000 sites over the  next  3-5  years.  The  outlook  for  the  tower  business  in  Myanmar remains  bright  with  OCK also vying for tower maintenance contracts to add to the 15,000 sites  it currently manages  in Malaysia and Indonesiafor Tier-1 telcos. We believe this will provide a steady stream of recurring revenue for the group in the longer term. 

More  sun  please.  OCK  ought  to  benefit  from  the  next  round  of  the Feed-in-tariff (FiT) quota  –  32  megawatt (MW)  –  due  to be released by the  Sustainable Energy Development Authority (SEDA)  at  end-January. It currently owns a 1MW solar farm  under the FiT scheme and  is vying for additional 30-50MW via direct negotiations with the  Government. We note that SEDA will need to  add 351MW to the  current allocation on top of  the  projected  remaining  releases  of  474MW  to  meet  with  the Government’s  renewable  energy  (RE)  target  of  2,080MW  by  2020. Management is hopeful  that  SEDA  will raise the RE allocation for  solarby then. It currently stands at 64% of the allocated RE mix.

Source: RHB