FYE21, 22, 23, 24 and 25 = PE3.7x, 7.4x, 14.8x, 20x, 25x (capacity doubled by 2024, 205b pcs). risk reward looks reasonable taking into account DY of about 6% p.a. (for next 5 years) if bought at RM5.00 per share.

Research houses upgrades all the Top 4 gloves companies since March 2020, from few hundred millions to more than 10 billions until lately, however, TPs keep dropping due to some other non fundamental reasons. With 15% DY for TopG at RM6.60, it may be enough buffer. The RSS on TopG is also unprecedented, high, perhaps too many derivatives issued and not monitored by regulators, equity link notes, structure warrants, and other stuff we do not have enough information.

1) TP3.50 or TP13.50 for Top Glove, (a)reliable or (b)not reliable?
2) With (a)motive or (b)not in the report?
3) (a) Unethical or (b)not competent of analyst?
4) Does the report (a) raises more questions or (b) answers all doubts

If reports gives you more (a) answers then (b), would you make your decisions B, S or H on the report?

we can only speculate or deduce, but we will never know the truth behind. Commonly in a RSS, the lender or the borrower, do not do it for a short period of time, i.e., one week or one month, it is for a period of more than 1 month, 3 months, 6 months or more. From another angle, players can also churn RSS. Sell, buyback (closed position), sell again, buyback again (closed position again) on the same day. Lender can call back the share anytime (in RSS). This is a risk borrower cannot avoid.

DK, it's important to know what is the JHDP's dividend (and repatriation policy) and JAKS's dividend policy. If unable to know both, depends how good is your guessing game.

Using Top Glove as example, I believe they can make about RM25 billion in next 10 years. Hence, using a PE25X, the estimated intrinsic value is about RM7.80.

Top glove value is estimated RM75b. Or RM9.38. Based on 10 years assumed PE 30x (better hygiene post Covid-19) and earnings next 10 years about RM25 bil.

Based on information available to-date, Top Glove fair value ranges from RM7.50 to RM9.50 per share (using PE of 25-35x, based on allievated world demand, using average forecast earnings for next 10 years). In any case valuation is for reference only, as we know, price is determined by liquidity and sentiment, and news flow.

Q4 results will be very close to Q3, plus minus 5%. Based on total value traded from 1-14Dec, it is about RM67b or about RM6.6b per day. Oct and Nov is about RM102b per month. Q4 value traded will be around RM340b, quite close to Q3 of RM357b. Based on estimated profit, FYE20 can reach close to RM390m profit at average PE of 25x, market cap it about RM9.7b. At the moment market cap is about RM7.1b. There is about 36% upside with a TP of RM12.00 per share.

Actually it is quite simple, when Supermx/Top Glove next quarter exceed the research houses' consensus with double digits, and ASPs still has no sign of peaking in Nov or Dec, share price will move up (moratorium issue is temporary knee jerk).

warrant is a bit tricky (to make money for trading), if they have good catalysts between now and december, based on recent stocks performances, anything is possible. (Solutn Engrg up from 4.5 sen to 84.5 sen, and its warrants up from 1.5 sen to 49 sen, by just a MOU on "fill & finish" and many more vaccine stories, I believe this stock should be voted best performing stock in Bursa, 1800% and its warrant is 3300%). Maybe more JENDELA story??? Or they may benefit from switching of themes.

lets hope they can keep up the volume. today (1st Sep) looks not bad, 1.5 million for 1st hour of trading. More importantly, they can grow their towers + tenancy ratio, especially for Myanmar, where margin is better.

@MissTan, based on the brief article by soyacincau.com, my only deduction is JENDELA = NFCP0.5.

As long as there is capex and opex (upgrading) from telcos (whether NFCP1 or NFCP2 or NFCP0.5), OCK will benefit. (as I mentioned earlier, NFCP & 5G is a "bonus" to OCK growth from towercos & solar pv).

I remember reading a research house report that OCK growth from FY20-22 is about 15% p.a. - 20%, that is not too bad. That time, they have not take into consideration of NFCP and 5G or Solar PV. So, any new participation whether 2020, 2021 or 2022 will help improved its earnings.

OCK is capital intensive (towers and solar) with reasonable payback period of 6-7 years. Due to its continuous expansion (each year capex is RM120-150m for last 5 years), depreciation eats into its profits, but operating cash flow is quite good. Invested about RM700m over last few years, cash flow payback (operating) is about RM100m - 140m, is not too bad. Unfortunately, they are "perceived" as high gearing. Compared with other listed towers companies, their gearing is very low, less than 1x. For me, their debt is good debt as it is assigned with sustainable long term lease rental income. In fact, many listed companies do not have such a strong sustainable income.

I have just glanced the 2Q results. Despite MCO negative impact to most sectors, OCK manages to maintain 1H PAT similar to last year, it is deemed good.

OCK 2H PAT always better than 1H, with about RM67m projects from NFCP, hopefully will complete part of it and profit can be recognised. OCK continue to expand, as can be seen from the additional capex in the cash flow statement. Liabilities dropped about RM40m, which is good. OCK will continue to benefit from NFCP and 5G.

Profit after tax is about RM28m for FY2019. EBITDA (normally use to measure telco and telco related sector) is about RM140m p.a. (RM35m for Q1). EV/EBITDA for OCK is good, about 7x. There is room to rerate to 10-12x. Q2 may be flat or even lower due to MCO, but consensus profit is about RM31-33m (11-18%) for FYE21.

@holyspirit: Similar to the first one (earlier I estimated RM20m, now they try to get RM24m). Technically not material. They have about net loan of about RM500m, using the fund to repay overdraft RM10m @ 7%, savings is RM700,000. Towers and Solar PV owners biz require huge capital, I think they have RM700m worth of these sustainable assets (10-20 years concession) and net loan of RM500m is not high compared with other tower listed company (2-3x of shareholders funds).

The reason profit is lower than the operating cash flow is the depreciation of about RM35m. This is normal for capital intensive business. In fact for new toll roads, initial years they may make losses.

Sometime it may not be a bad idea to switch (some of the value stocks that is not moving) and come back later when volume picks up. Hopefully switch to a good "trend stock" like healthcare related sectors.

Lately, you will notice "value traded of more than 50%" stocks are concentrated on healthcare related sector (esp gloves), tech (follow NASDAQ), and penny stocks (mainly volume traded) (as well as rotational play gold, o&g, vaccine distribution, NIIS, solar, plastic, masks and many more). Very concentrated to trend play. OCK is not in the trend yet, so have to wait. Some remisiers recommends to allocate some capital to "trend play".

Apr-May-June = total valued of shares traded is RM226b ( Bursa Q2, PAT RM84m). July-18Aug = RM212b. Can consider if below RM10.00 per share as upside about 15-20% should the value traded in 2H better than 1H by 20-30%. Highly achievable based on current market conditions.

1) Telco towers latest revenue is about RM150m (recurring) and growing about 8-10%p.a. - locked in for 10-15 years with major MNOs/Telcos (Can bring in RM2b in 10 years)

2) Solar PV revenue (also recurring) with 15-20 years of concessions to run based on old tariff (higher than new tariff), expanding with new acquisition from 6MW to 12MW.

3) Rotational themes on gloves, healthcare, tech, o&g, gold, penny stocks. Small & mid size stocks (around RM500m) and NFCP & 5G Spectrum may be next.

https://klse.i3investor.com/blogs/PublicInvest/2020-05-20-story-h1507746150-HEXTAR_GLobal_Berhad_Good_Start.jsp

1) Public Invest TP91sen, PE15 on FYE21 (7/8/20 @ 71 sen)
2) Growth prospects on food security (agrochemical) + wet wipes (consumer)
3) PAT FYE20, 21, 22 is RM47m, RM50m, RM54m (FYE19 RM2.4m, net off merger adjustment of about RM24m).

anyone can clarify OBM vs OEM model, despite being mentioned many time OBM provide greater profit margin than OEM, Supermx vs Harta or Top Glove, last 10 years profit margin on average, Supermx profit margin is lower than Harta and Top Glove.

Excerpt from the Star
"Ogut joined Maxis in 2018 as the chief operating officer and was made ... as support given to the National Fiberisation and Connectivity Plan (NFCP) and ... “Post-Covid-19, our strategy is to double down on fibre, convergence, ...

1) https://www.nst.com.my/business/2020/05/593721/china-eyeing-malaysian-companies-expand-5g-tech

2) both XOX and GPacket partner Chinese Telco for 5G project in Malaysia - both share prices shot up 600% or 6x.

3) when is OCK's turn?

1) Rights issue is generally perceived as negative (although not absolute). However, if we look deeper into this Rights Issue of 10:1 with free warrants, it is technically insignificant, i.e. raised RM18m only (after the revision announced last Friday 24 July), only one third of the private placement raised in Oct 2019 for around RM52m @ 60sen.

2) The other reason is generally telcos is also effected during this MCO, whereby everyone perceived OCK is in the same sector. OCK is related as a service and maintenance of telcos, but its contribution to revenue has been reduced to less than 30% in 2019 (taken over by towerco and solar pv - which OCK has invested more than RM600 million since 2016).

3) Besides towers and solar pv, coming quarters and years, OCK will benefit from NFCP and 5G Spectrum, which is worth billions.

“We will announce the decision as soon as possible, because this spectrum band is important to maximise usage nationwide," he said. (Deputy Communications and Multimedia Minister Datuk Zahidi Zainul Abidin said that the decision on whether the 700 MHz spectrum would be allocated to a consortium or individual licensees). Yes, it will set the direction for MNOs/Telcos on their capex on 5G, and OCK will assist in implementation for the telcos. How soon? Only Datuk Zahidi will know.

Towerco's total revenue is about RM150m, for Myanmar alone is RM70m. In Myanmar, OCK has more than 20 years lease contract, giving it a total contract of RM1.4b to RM1.7b or more due to improving of tenancy over time. OCK should have emphasise it in their prospects as the 20 years contract is secured.

NFCP (5G) related counters like Opcom is benefiting, today up almost 50% from 40 sen to 55 sen. Opcom got a small project (less than RM50m) from Telekom and it flies. Opcom manufactures fiber for Telekom, and later they need people to lay their fiber, that's where OCK has the expertise. So, hang on for a little longer.

@holyspirit, what i was actually referring to was healthcare benefited from the vaccine announcement/award (few billion projects), similarly, NFCP 2 award announcement of few billion projects will benefit the participants of NFCP, including OCK.

Hopefully, OCK share price will increase (like what is enjoyed by some of the healthcare counters lately)

@MissTan, MCMC is currently having a public inquiry into the award of 5G Spectrum. MCMC did not mention when will be the award.

However, NFCP 2 is going ahead and expected to be awarded in 3Q2020. Ideally, the 5G spectrum and NFCP should run concurrently. Besides towers, 5G backbone (fiberisation) is also critical. Hopefully the announcement of NFCP 2 will be in Aug/Sep, and participant companies will benefit (like the healthcare counters)

Yes, themes will rotate and include new sectors. OCK today’s core sector is Telco Tower owner, operator and lessor. Local houses is gradually understand this sector better. It can come quickly near the awarding of NFCP time like the IIS. Hopefully by August?

1) @Platypus88, please read the latest annual report, EBITDA of towerco revenue ranges from 73% to 78%. I use EBITDA on INVESTMENT yield, 16% to 18% (that's why I mentioned cost of investment, not revenue). Myanmar revenue is about RM70m and is growing, the EBITDA is RM51m, EBITDA margin is 73%.

2) I am trying to explain from an asset yield's perspective (like you buy a property, what is the rental yield like) so we could compared with other assets.

3) @holyspirit, for patience investors, hopefully it can reach it in less than one year.

4) Not sure it will kill the ock-wa, as the ex-rights is only 2-3 sen down (and the rights of 1:10, as I mentioned many time, not very material, barely can raise RM19m, even lesser than the private placement of 60 sen for RM52m less than a year ago). If the theme play for towerco comes (not telco), sooner, than it is possible in may reach 90 sen before year end. Over time, market will be more familiar with towerco as more coverage by research houses.

5) Edotco investment in Myanmar is impressive for its 1,250 towers. Its tenancy growth about 20-20% p.a. for few years after they bought it 2015/6. As for OCK, hopefully it can reach a double digits growth in tenancy ratio as well for its 1,000 towers in Myanmar.

I notice my fund manager is also accumulating OCK in June 2020. Of course not all stocks he choose is great, but he bought some Top Glove at around RM4.16 per share, still holding. He also pick some DSonic, Serba and Genting. Overall, he is doing ok. But he still holding 35% cash in the portfolio.

In 2015, edotco bought 75% Digicel MTC, Myanmar for USD221m, for 1,250 towers. So for 100%, it is about USD294m. So, OCK has about 1,000 towers, it will be USD235m x 4.3 = RM1.0billion.

@holyspirit, at the moment, market is over 65% concentrated in gloves stocks (in value). At the same time, in volume terms, over 65% is concentrated on penny stocks, so not much attention is paid on "valuation".

There is no rule in market movements or sentiments, it can change course as it wants. However, general consensus is stock price should catch up to its value over time, sometime longer than you could wait, 2, 3 or 4 years. As far as I know and understand, towerco is like renting an asset (depends on tenancy ratio) at about 12-18% yield, and it can goes up to 18-25% yield when the tenancy ratio improves.

Now, for OCK, its tenancy ratio ranges from 1.3x to 1.4x, and there is room for it to grow to 1.5x to 2.0x. (substantial of its assets is in tower around RM600m). Of course they also has solar assets of about RM100m.

Renting of tower and its valuation is not known to many local investors yet. Hence, valuation methodology used also different from one to another. But we know market is using EBITDA multiple on M&As. We can estimates.

Our only risk is TIME, how soon will the price catch up to the value. That one, if you are lucky (buy at the right time) your yield will be very good, like the gloves.

1) Myanmar total cost of investment is about RM315m. The EBITDA for Myanmar is RM51m, giving a EBITDA yield of 16% (and will continue to improve as the tenancy ratio improves).

2) Vietnam EBITDA yield is about 18.6%, invested RM210m. As shown before, based on valuation using EBITDA multiple (for towerco), plus other biz, OCK is worth about 90 sen. upside is good.

3) Most companies "badly (>25%)" effected by over, OCK too, but impact is minimal (less than 10%). Earnings is sustainable and growing.

1) I have explained, warrants pay substantially (if not all) for rights issue, meaning free 10% of shares
2) OCK will attained 5,000 towers from 4,200 towers, when they can work on the spin off
3) NFCP Phase 2, will announce their award in Q3, and spectrum in FYE 21
4) OCK price does not reflect its value (upside >40%)
5) Last 2 years drop due to "removal from Shariah" and "change of government - effect the spectrum allocation"

small issue based on announcement, can be an opportunity.

@holyspirit, normally after ex-date, OR (Official Rights) will be traded in the market, you'll be credited the OR and this can be traded in the market for a few weeks (please confirm with remisier), you can choose to dispose the OR, the person who bought the OR can then pay another 20 sen to get this rights issue shares. After two weeks or so, this person (who bought the OR and pay for the rights) will be credited the OCK shares.

If you choose to keep the OR, then you must quickly take up the rights (20 sen) within the stipulated time given in order to own the rights issue.

Market sentiment towards telco is not very positive, but going forward with 5G and spectrum should be better. However, many still confuse OCK as a telco sector company, in reality, TOWERCO has a better business model and locked in concession of >20years for Myanmar and >5 years for Vietnam. So, Towerco profits are more stable and always has good upside when tenancy ratio improves and also expansion.

1. PRICE
Most (not all) RI is seen as "negative" by the market. (Unless that stock is part of the theme play or very popular with syndicate).

2. FUNDAMENTAL
If you look at RI of 1:10 (with warrants), the fund raised actually quite small, about RM19m only (and OCK's about 75% held by institutionals, likely will pick up). If you look deeper, they are issuing at 20 sen, a steep discount of >50% to the existing and prospective investors (at 52 sen). The warrants (only 95.9m vs outstanding shares about 959m) issmall in proportion, and the pricing will likely pay substantially for the RI of 20 sen.

RHB mentioned its FYE21, revenue contribution is likely increased to 80% from 70% (that means OCK has sustainable earnings) and growth potential as well from expansion of towers and solar and also increase in tenancy ratio. Consensus gave OCK's TP about 68 - 73 sen.

3. MISCONCEPTION
Btw, many "undervalued" stocks is overlooked at the moment due to "political uncertainties" and focus only on Covid-19 related stocks and penny stocks.

Like the market, sometimes market may miss this undervalue stock because the current theme(s) is on related biz of coronovirus. They also has the misconception of rights issue (of course, some raised a lot of funds to really pay for debt, in OCK's case, only RM10m allocated to pay debt of about >RM500m, it's insignificant. However, time will tell, basically this is a "dividend in disguise", giving you 100 units of OCK (if you have 1,000 shares) free of charge, you can sell this rights and get >10% return. Of course, 10% return during this gloves season is nothing, hence, not much interest and ignored.

Those patience investors, who looks for "defensive and growth stocks" will be accumulating OCK for the double digits gain, on the pretext NFCP and spectrum capex will be awarded in 3QFYE20 and FYE21.

It takes 3-6 months from the announcement of the proposal to complete the 1:10 rights issue. At 52 sen, ex-rights is 49 sen and gets a free warrant. This rights issue will likely gave the new investors a double digits gain upon completion. FYE21 will be a better year compare with FYE20 from growth of tower tenancy improvement and expansion + solar PV.

Looking at FYE21, OCK likely will do better than FYE20 as the towers expansion and tenancy improvement. NCFP and Spectrum capex will be a bonus.

1) OPR cut will benefit OCK.

2) More importantly, OCK recurring revenue will exceed 80% FYE21 onwards and has capacity to grow yearly in double digit (via the tenancy ratio improvement).

3) Warrant B will substantially pay for the rights issue, is like 1:10 bonus issue for existing shareholders

4) NFCP or 5G backbone projects will be additional contribution (next 5 years) on top of the recurring profits.

5) Spectrum (although delayed), will be awarded to MNOs next year, and this will also benefit OCK from MNOs capex allocations.

6) Majority stocks are down other than gloves stocks and penny stocks, hopefully local and foreign institutional will be back gradually.

1) Assumed they pay back loan immediately of RM500m x 6%, they will have additional profit of RM30m. Loan for towers basically is 6-7 years on average. This loan is there as OCK is expanding every year (RM120m - RM150m) x last 4 to 5 years. Actually, they did get lost of cash flow from tower, it is used for repay loan, interest and expansion (from 600 to 4200 towers)

2) The plus point is OCK has capacity to improve its profits without additional capex from the tenancy ratio increase, say for 1.3x to 1.8x, but this can only be done gradually over time (few years) and all the improvement in revenue (30-40%) will flow directly into profits. As soon as OCK par down its loan, it takes new one to expand, that is why the tower keep on increasing, for me, is good, meaning excess cash allocated into a RECURRING PROFIT BIZ. Just like my rental increase 10% each year, so I buy more units (towers). The yield is easily 12-18% p.a. (depends which country you are referring)

3) NFCP allocation is a bit slow (although they are implementing phase 1). Hope in this 3rd quarter will be some good news.

4) Local institutional investors is not aggressive (worry about withdrawals of unit trust holders), I think.

Rights issue of 1:10 (not very material, RM19m only) is more of a "dividend in disguise of about 4% within 6 months" for the existing shareholders. NFCP 2 (about RM1b) will be awarded in 3Q), some exiting news for telco/telco related companies.

"Popularity" and "allow for operators" comes first. Good sector theme comes second, OCK falls within the "telco" sector which is neutral, hence, not much attention, although towerco is part of telco eco-system.

Towerco and Telco has very different business model, one is based on few MNOs and the other based on millions of customers. Market will categorize them together even though one depends on concessions with telco and tenancy ratio, the other depends on subscribers satisfactions and coverage. Towerco is similar to a IPP, besides having a core tenant, it can take multi-tenants, whereas IPP only has Tenaga as customer. No worries, the market will rotate theme.

PETALING JAYA: OCK Group Bhd is eyeing additional jobs from the government’s National Fiberisation and Connectivity Plan (NFCP) 2 through a partnership with a telecommunications service provider (telco), according to RHB Research.

The company had earlier clinched a RM60mil network equipment job under the NFCP 1 when it collaborated with the telco. (May, 2020)

1) if all shareholders take up their rights issue, no dilution effect
2) ESOS dilutive is 2.7% p.a. for 5 years
3) RHB using FYE21 to estimate, includes 5G Spectrum (in The Star as well)
4) Rights issue with free warrant is a “special dividend” in disguise at about 3.5% yield (in 6 months) based on today’s 55 sen. (Will show later)

Extract from RHB Research:

Reiterate BUY, new SOP TP of MYR0.68 from MYR0.65, 19% upside, after rolling forward our base year to FY21F. We continue to see the OCK Group as a strategic beneficiary of mobile sites and fiber deployments. Stronger tower tenancies and site acquisitions in Indo-China should sustain the double-digit growth in tower leasing revenues going forward.

“We expect the recently-announced rights issue to be priced at a significant discount, to entice shareholders.”

Other key catalysts are the sale of a strategic stake in its towerco and new contract wins.

Kenanga maintain TP, MSecurities reduce TP.