LESSONS

1. Discipline
2. Patience 
3. Action

WHAT IS A VALUE STOCK?

1. ROE >15%
2. NPMARGIN >12%
3. GROWTH - DOUBLE IN 3 TO 5 YEARS
4. LOW DEBT LEVEL
5. SUSTAINABLE EARNINGS

IS OCK A VALUE STOCK?

My fund manager recommended this stock about a year ago.  But the price is below water since its recommendation.  Technically, he will get a kick in the butt for such a recommendation.  But, I will cut him some slack.  Perhaps he is over optimistics.  Similarly to some analysts, projecting such an aggressive profit forecast.

Example, in 2014, OCK make about RM16m.  RXX analyst projected a profit of RM33m and RM35m for FY15 and FY16.  So far, based on actual result, 9mths to-date it only achieve about RM15m.  Perhaps, a full year, conservatively, it can achieve RM20m.

RM33m  (forecast) vs RM20m (actual)

Wow, RXX is such an optimist.  Because the expectation is so high, and it did not achieve it, hence the share price dropped (taking into account the rights issue & bonus issue).  This is not the time to investigate who is responsible, a more important question is OCK has potential?

Lately, OCK is in the news, getting new projects in Mynmar and Indonesia, and raised rights issue (Dec 15), I believe, the growth potential is real, since the contract is secured.  Now, the risk is the execution.  Since they are assumed to be the expert in their field (building telco infra), it is assumed they can deliver.  Their customer is Telenor (Norway telco).  

Going forward, I believe OCK can double their profits (from FY2014) from RM16m in FY2016 or 2017.  Taking into account the growth, the potential of this stock is good.

At 70 sen today, I believe, this stock can provide a 15% p.a. for the next 2-3 years.  So, I deemed it as VALUE STOCK.

DISCLAIMER

xxxx xxxx xxxx. (Buy at your own risk, and don't forget, like all commentators here, all are free advice)