WILL THIS HAPPEN TO OCK GROUP?

"What excites the market whenever Brahmal emerges in any company is the savvy investor’s reputation he carries with him.

One good example is his Old Town Bhd investment. On March 4, 2012 Neobalano Carpus Ltd, a wholly-owned subsidiary of Creador had emerged as substantial shareholder in OldTown with a purchase of a 5.8% stake in the company,

Creador then continued to accumulate OldTown shares to a 10% stake, before disposing its substantial shareholdings in April 2013. OldTown was the darling of the stock market during that period, with its share price more than doubling to RM1.82 in April 2013 compared with 86.5 sen in March 2012."

PS: 14 April 2017

1.  Correction from 32.5sen to 28.5sen within 2 days of 13 - 14 April.  For those who are in for long term, time to accumulate as RSI is in oversold position.  So far that I understand, OCK is trying to complete the remaining 300 towers in Myanmar, since Jan 2017. A bit of delay to 2Q to complete, due to rezoning.  On top of that, MPT became the co-tenant on some of the towers, about 10-15%.  Similarly, the Vietnam outfit, SEATH is expanding new towers as targeted, 200-300 new towers yearly.  Compared with Jan 2016, none of the towers was accruing income.  

2.  Today's scenerio is different, 1938 towers in Vietnam is receiving revenue.  600 plus towers in Myanmar is receiving revenue.  Additional 300 more to be added for Myanmar and 300 more for Vietnam.  Perhaps, some for Malaysia.  Revenue from Myanmar and Vietnam is estimated RM90m (2017), RM110m (2018) and RM120m (2019) assuming tennacy ratio of 1.0x (Myanmar only).  If we use a more realistic figure for Myanmar at 1.2x, the figure will be RM100m, RM120m and RM130m.

3.  In Jan 2016, OCK is about 70 sen, now is about 85 sen, market cap has increased RM130m.  The company has raised private placement in June/July of RM64m and loans of RM300m (for Myanmar & Vietnam) & Substantially this capital raised, is built into generating income assets (tower lease) of 600 towers + 1938 towers providing about RM90m revenue.  Would you pay an extra RM130m producing EBITDA of RM50m (which the market pays EBITDA of 10x - 12.5x of RM50m = RM500m to RM625m)

4.  So, we are paying RM130m more to get additional value of RM500m-625m, why not? Price is what you pay (RM130m), Value is what you get RM500m-625m.  Rationale?  

5.  We are fortunate because, market is never effiecient, and it is not going to be.  Good luck, that is the reason why some investor top up even after share price is up 50%.  Isn't it?