Constructive feedback on stocks is harder to find in forum vs few years ago. For Ekovest, one have to look at the existing toll collections and also the equity participation in the toll. The issue is more of sentiment.

@birkincollector, looking forward for your "professional" chart

@win1661 it’s because they expected to grow 15-20% last 2 years it was delayed principally due to Myanmar towers delayed, completed in 2018 instead of 2016 and contract work shrink prior and post GE, uncertain of policy. So, the growth is pushed to 2019-20.

KNM was boring for 3 years 9 months from 78 sen to 7.5 sen, today 8 Nov 2019, is 46.5 sen. 600%+. Similarly, OCK was boring for about 2 years. Unless profit up, it will continue to be boring.

@Asy_Mett couldn't agree more. One of the most boring stocks in town.

Towerco's debts are "ringed fence". In order to expand towerco biz, it needs new equity, hence, OST (sub of OCK) is doing a placement and listing in the future. Towerco biz debt level is lower than market benchmark.

OCK also has about net trade debtor (trade debtors less trade creditors) of about RM150m.

Total LTL = RM300m (mainly for towerco - ringed fence), STL = RM190m (partly for towerco, solar energy, other contracts secured loan via BAs, Revolving Project loan, OD), and Cash = RM80m @ 30 June 2019.

OCK's debt is manageable. But in order to expand further, new equity is needed, and unlocking the towerco value also is a good move, as analyst said, it may add 13 sen to 35 sen per share gain.

In any case, OCK's PP yesterday just raised RM52m equity for green energy assets.

AGM - MD said to focus on construction in next 1-2 years, may expand biz to Singapore and Sarawak

It may not move until it secured a major contract. 3,6 or 12 months.

PNB paid about 2.5x for equity invested by SILK, although SILK only achieve its projections after 10 years and was loss making for many years.

better qtr? OST private placement? Proceeds from OST to expand Myanmar? acquisition of green energy assets? any new project from NFCP? ISOC Philippines with edotco contract results? LSS 3 tender?

1. @kahsoon888, if OCK follow half of KNM it is enough. KNM private placement at 16 sen and listed on 3 June 2019, today, 5 Nov 2019, KNM closed at 45 sen, up almost 300%.

2. Similarly, JAKS private placements at 70 sen, listed on 28 May 2019, today, the JAKS is 106 sen, up about 51% and its warrants was up from 53 sen to 85.5 sen, up about 61%.

3. Will OCK be next? Likely if the earnings for coming quarter is positive.

OCK listed 87.1m new shares today from PP. If not mistaken, the PP price is 60 sen, hence, raising about RM52m.

So, the proposed acquisition of green assets will soon be announced. Also, hope that the IPO on towerco biz will be announced soon (this will be a bonus).

@perangbrown, FYE2018 included a RM60m write back, the normalised PATMI is RM275m for FYE2018. As for FYE2019, the PATMI is RM327m, an increase of RM52m or 19% depite share of profit in Vietnam dropped significantly.

Scooped up some WA.

interesting, waiting for the listing of RCPS and warrants, then will decide to add or not.

better interest = better volume = better sentiment = better price (on assumption better results)

RM4.8 billion of concession assets!!! Trade war proof? Brexit proof? Geopolitical risk proof?

initial stage, cash flow is higher than profit and loss, due to depreciation and interest expense, when the tenancy ratio is gradually improving from 1.0x to 1.4x concurrent with the increase of number of towers. Good news is there is still potential in gradual increase of tenancy ratio from 1.4x to 1.6x, additional cash flow and profit and loss, with minimal cost. Accumulate when volume is low.

@bpng0904 most people make huge losses if they bought small cap stocks during its peak, unless they average at their low. Most small cap rebounded 50-100% from their low, but still 20-40%off its peak. Yes, OCK delayed it’s Myanmar tower project for 2 years due to Telenor changes their planning locations from geographical to demographic coverage. Hence, profits growth delayed for 2 years. Those who bought around 45-55sen will be rewarded later as the growth starts coming in FYE19/20. So, I am hanging on tight, as my average price is 60 sen. Hopefully its gloomy days are over. I just like their long term towerco biz.

MYEG is also an interesting stock, but bashed due to post GE, causes lots of uncertainty on renewals. It already dropped from RM9b to RM4b, I believe if they can renew its concessions, it has a good upside potential. So, it’s a billion dollar questions, but lately came down due to foreign investors. Have to wait till most of foreign selling complete, then is a better time to accumulate and also some of the renewals. Good luck to your MYEG as well.

PP so fast this round, must be deal will be concluding soon. That's positive news.

@Fabien, just wondering why the FCF vs PATMI have a huge difference of RM500 mil for 2013-2019.

@Fabien, if I may ask, where did you extract the FCF of HLI, it grow from RM158m to RM481m, about 3 times in six years, this is really high growth (2013-19) similarly the dividend paid doubled from RM80m to RM157m (CAGR 12%) in the same period, that is not bad at all. Volume still pathetic at 55,000 today. (equivalent to Malaysia stock market volume, pathetic)

Many warrants collected between 11.0 sen to 11.5 sen for the last one month. No one will know whether the price will goes up pre or post PP. Some goes up before, some after, and some delay. It may go up gradually until the announcement of 3Q.

OCK 62 sen, WA 11.5 sen, Mother is 5.4x of WA, about 14 months to expiry for WA.

For higher risk taker, WA appears interesting as well.

For every 5.5 sen up mother share, WA only needs to go up 1 sen. On a pretext of higher earnings, secure contracts for LSS3, NFCP, Vietnam Acquisition of towers, Listing of Towerco biz (medium term), re-rating is very possible.

1. Tower biz is cash flow rich but profit and loss slow due to depreciation and interest costs

2. While tower biz is expanding, Myanmar tower biz was delayed for almost 2 years

3. Not everything is hunky-dory, Vietnam faces headwind when OCK needs to spend some money to refurbish the older towers to maintain its useful life, acquisition costs, while the TNS segment on contracting biz faces headwinds pre and post GE as telcos is holding back capex spending due to uncertainty of direction on telco policies (FYE17 & 18), the servicing side also faces margin squeeze and forex loss in Indonesia.

4. With LSS3 and NFCP in line, OCK stands to benefit from it in a significant way.

5. One analyst mentioned there may be a re-rating on Vietnam acquisition of another thousand towers.

6. IPO on towerco biz is a medium term catalyst.

7. Despite all the events, market sentiments play a significant role as well.

Dividend has been growing from 25 sen to 50 sen over the past 5 years. Assuming profit doubled in next 5 years, using the same existing PE of 10x, you will get about say RM20 per share + average dividend (growing from 50 sen to 100 sen), total average return together with dividend is about 21% p.a. CAGR.

On a conservative note, you may get 16-20% p.a. CAGR. If market sentiment is good, maybe this counter may enjoy PE of 15x instead of 10x. Actually the choices available is simple, BUY or DON'T.

@monetary, normally is 20 years. When we rent our properties to tenants, how many of us really calculate rental yield after depreciation of the properties?

First few years after construction of new towers, the maintenance is very low, unlike the acquisitions of old towers in Vietnam, initial refurbishments is required to prolong the life of the towers. In reality, if maintained well, the towers useful life can exceed 30 over years.

OCK bought 1,983 towers in early 2017 in Vietnam. By end of 2018, the number of towers increased to 2,500 towers. OCK and its JV partners, did not raise any funds to purchase the additional towers, which means, Vietnam existing towers can generate sufficient cash flows to purchase about 500 additional towers without raising new funds.

OCK has invested up to RM600m in towers, and leased to major telcos for 5-20 years. And some most of the towers can be leased up to 2-3 telcos. At the moment, OCK average tenancy ratio is 1.3-1.4x, and has the capacity to grow up to 2x.

The cash flow yield will be exponential as the cost of maintenance for one, two or three tenants on the tower.
I understand their loan for tower is for 6-7 years, hence, when they pay down the loans, interest will be reduced, earnings will improve.

FYE18 depreciation is RM37m. FYE19 is estimated to be RM60m. Maintenance cost is only a fraction of depreciation.

1) Detail of NFCP https://www.malaymail.com/news/malaysia/2019/09/03/national-fiberisation-and-connectivity-plan-is-not-a-mega-project-mcmc-clar/1786935

2) "with opportunities spread across the construction, operation, and maintenance of the digital infrastructure"

3) NFCP RM21.6b - many areas OCK can participate. OCK has done EPCC work on fiberisation work in Cambodia. Maintenance work also provides recurring income. Few years back OCK benefited from local 4G LTE, so 5G, it will benefit also.

4) 5G requires different type of towers and functionality, cater for short distance (less than 100m), briefly seen here https://www.lifewire.com/5g-cell-towers-4584192

Assets (towers) expansion last 3 years is quick. Depreciation for 2016, 2017, 2018, 2019(E), RM18m, RM34m, RM37m, RM60m (E), from about 400 towers to 4,000 towers.

Despite of flat profit over last 3 years of about RM25m p.a., EBITDA has grown from RM60m to RM100m (FYE16-18), and estimated FYE19 is RM120-130m, and more importantly it is sustainable.

The continue expansion in towers (construction of 500 towers and purchase of 1,000 towers) require the spin off listing. And the expansion on green energy in a meaningful way, also needs new equity.

Copied from @Fabien of HLI's FCF

2013 - 158m
2014 - 148m
2015 - 182m
2016 - 280m
2017 - 344m
2018 - 452m
2019 - 481m

Total cash flow about RM2.045b. Dividend payout ratio is 50%, hence, balance is about RM1.023b accumulated cash, which is equates the net cash balance @ 30 June 2019, RM1.1b.

Going forward, with a FCF of about say, average of RM450m (next 3 years), cash flow will continue to grow another RM1.7b. HLI will likely, have a special dividend payout (100%) of RM1.00 to RM1.50 per share on top of the regular dividend of RM0.50. More importantly, HLI can maintain its earning growth.

Accumulate on the pretext of good results for at least the next 2 quarters. (NFCP & Green Energy Tax incentives - will be a bonus)

@Johnchew - clarifications on OCK's debt

Clarifications on Debt (4 Oct 2019)

1. Debt is alright as long as it is secured with tenancy income and has long term contract.

2. Total LTL = RM300m, STL = RM190m, and Cash = RM80m @ 30 June 2019

3. LTL of RM300m is mainly ring fenced, with 5-15 years secured contracts with Telenor and major telcos in Vietnam. LTL are mainly pegged against towers in Myanmar and Vietnam (a bit of Malaysia), hence, banks has stringent loan service ratio with secured contracts. Tower assets EBITDA is RM60-70m p.a. and increasing, and why OCK worry?

4. STL of RM190m, less cash on hand of RM80m is NET is about RM110m. About 70-80% of these STL comprises of Bankers Acceptance, Revolving Credits and Project revolving credits, this means, it is secured by bank on invoices billed to customers (mainly Telcos)

5. Besides, OCK has Trade debtors of RM280m and Trade Creditors of RM120m. Net trade debts is about RM160m, to be collected. Even if you assume 90% collectible, OCK has about RM140m.

6. Towerco alone, has about RM120m turnover. Ebitda is about RM60m to RM70m, sufficient to service the banks interest and principals, and growing tenancy also provide higher revenue.

7. Btw, Towerco biz, the debt over SF is low (less than one time) against other towerco that can leverage up to 3 times.

8. High loan is bad, if you cannot pay off, totally agree. But used on good assets (repayable by sustainable long term leases, why not, once OCK hit the economical of scale for the towers + tenancy, profit and cash flow will grow. I.e. profit grows faster than revenue, and cash flow is far better than profits because of huge depreciation. i.e. depreciation is higher than maintenance cost.)

(Hopefully this help to clarify any misconceptions). If you want to worry about high debt, worry about USA twin deficit and China's debt as well.

That's very encouraging for green energy company to invest into this sector. Improve margin. Hopefully OCK will get some green energy projects. PP timing is just right. Assuming equity portion is RM50m (30%), the balance can get loan of up to RM167m (70%) so will have a sizeable green energy project.

It is hopeful the new investor(s) from the private placement is established, this may boost the shareholders' profile. With new funds, and strict "selection criteria", it is hopeful the concession assets is SUSTAINABLE, the key criteria for new era fund managers that emphasis on ESG and SRI.

Hopefully OCK can get some good solar or green energy assets from the PP. Since OCK already into capital intensive towerco projects, it may be a good idea to raise some equity for green energy, which is also capital intensive. The last PP, in Aug 2016, the amount raised was used to purchase Vietnam towerco EV/EBITDA of about 7x.

Hopefully this is the positive to the market. RM50m raised for green energy and solar project. This round is done by UOB Kayhian, hopefully there is some in it.

timing just nice.

Despite interest rate may drop, some bank gave FD 12 months at 4.28% p.a.

If there is a daily price chart for FD, I wonder if anyone will check for fluctuation? When analytics is good, price is bad, load up some. Unless our friend wants to take it private at this price. So, what is so bad of holding a FD with 4.6% p.a. and a good chance the price will catch up nearer to the value of the company.

FROM THE STAR

In an exchange filing yesterday, the consumer and industrial product manufacturer noted it incurred a RM172 million one-off impairment for the investment in its newsprint business via its 23.65% stake in Malaysia Newsprint Industries Sdn Bhd.

It 4Q18 earnings benefited from a RM60 million impairment write-back from the same investment while profit from the motorcycle business helped offset the lower profit from an associate company.

AFTER ADJUSTMENT OF THE ABOVE ONE-OFF IMPAIRMENT AND WRITE BACK

FYE 2019 - RM327M
FYE 2018 - RM275M
FYE 2017 - RM280M
FYE 2016 - RM247M

Normally for project loans, the banks will try to match close to the net cash flow, and also have some buffer to meet the debt service ratio.

Any excess, bank will ask you to keep in the sinking fund, only after that the balance can be used, normally not much left even for dividend for the first few years, because paying higher interest. (I believe this is practice for long term projects (IPP, Shipping, Towerco, Toll roads) and with secured income from the concession. Normally there is a clause that do not allow the concessionaire to pay out as dividend in the first few years, the major stakeholder here is the BANK (LEGALISED LOAN SHARK).

If OCK want to expand further and it does not have enough cash flow, it can raised it on its subsidiary level, via, placements in subsidiary or subscription of new issues by the subsidiary. The concern of high debt is understandable, but, it is more crucial to know if they are repayable.

Clarifications on Debt

1. Debt is alright as long as it is secured with tenancy income and has long term contract.

2. Total LTL = RM300m, STL = RM190m, and Cash = RM80m @ 30 June 2019

3. LTL of RM300m is mainly ring fenced, with 5-15 years secured contracts with Telenor and major telcos in Vietnam. LTL are mainly pegged against towers in Myanmar and Vietnam (a bit of Malaysia), hence, banks has stringent loan service ratio with secured contracts.

4. STL of RM190m, less cash of RM80m is about RM110m. About 70-80% of these STL comprises of Bankers Acceptance, Revolving Credits and Project revolving credits, this means, it is secured by bank on invoices billed to customers (mainly Telcos)

5. Besides, OCK has Trade debtors of RM280m and Trade Creditors of RM120m. Net trade debts is about RM160m, to be collected. Even if you assume 90% collectible, OCK has about RM140m.

6. Towerco alone, has about RM120m turnover. Ebitda is about RM60m to RM70m, sufficient to service the banks interest and principals, and growing tenancy also provide higher revenue.

7. Btw, Towerco biz, the debt over SF is low (less than one time) against other towerco that can leverage up to 3 times.

8. High loan is bad, if you cannot pay off, totally agree. But used on good assets (repayable by sustainable long term leases, why not, once OCK hit the economical of scale for the towers + tenancy, profit and cash flow will grow. I.e. profit grows faster than revenue, and cash flow is far better than profits because of huge depreciation. i.e. depreciation is higher than maintenance cost.

This is like a "biz fixed deposit:, while getting a DY of 4.6% p.a., biz will continue improving until one fine day (like how Aeoncr went up from 11 to 19 before the bonus issue, where DY from 4.9% to 2.7% when the share price rises with the profits).

The volume for the past one year is very very low, soon when the profits improve gradually (say double digit) and the PE (net of cash) is so low i.e. below 5x, fund manager can then justify to pay higher price for growth.

At the moment, market cap is RM3.4b, net of cash is about RM2.3b, whichi is equate to PE of about 7x, which is quite low. Then when prices goes up, DY will drop to 2.5%, i.e. with price up from 10.38 to 18.00, like Aeoncr. The question is, do we have that patience?

Great, accumulated some at 60 sen.

NFCP & Solar PV will come in only in a year or two, while ISOC edotco may comes in next year. More importantly, FYE19 and 20, towerco will contribute more as gradual commissioning of new towers & co-tenants as we speak, and loan for towerco is reducing. 60 sen is not demanding, the towerco biz itself is >RM700-800m (UOB Kayhian gave it RM1.0b)

Loan period normally matches with free cash flow for repayment of interest and principal.

Better growth as OCK continue to expand its towers and tenancy, hopefully double digits growth for FYE19 and FYE20.

Besides expansion on towers domestically, Myanmar and Vietnam, locally, there are a couple of initiatives that may benefit OCK in the next few years such as:

1. National Fiberisation and Connectivity Program of about RM21.6 billion

2. Government support of Solar PV nationwide

3. JV between ISOC edotco in Philippines

More importantly, as we look into the latest Annual Report, the approximately 1.5% of the Shariah Funds (in top 30 of FYE17) has sold down during the FYE18, it would be less negatives to the share performance.

As for gearing issue, the towerco projects financing is ring fenced and within the debt service ratio and the higher gearing mainly comes from short term revolving credits is meant for contract works and trading activities and supported by 'invoices', mainly from the telcos with strong financials.

I do hold some warrants and mother shares, and switches them when opportunity arises. Hence, I cannot be deemed entirely objective, even though what is presented is facts.

Good luck.

(Consult your investment advisors on decisions of investing).

Accumulated some WA, not because of the news, because of the growth (better qtr).

Good volume in mother share, similarly the warrants, positive sign. Normally high volume for OCK lasted not more than 5 days. Going up above 70 sen is about 10%, but the warrants returns will be great at the current 5.39x. May be worth taking this risk as management believe earnings will grow about 20% p.a., thanks to more contract jobs and expansion of towers and tenancy.

Assumed you sell mother 100,000 @ 62 sen and buy 560,000 warrants @ 11 sen, assume mother went up 8 sen, warrants up 4 sen, your warrants return is 36%. You make about RM22k for the warrants, mother return is about 13%, or RM8k. May be worth a while.

PETALING JAYA: Axiata Group Bhd’s unit edotco Group Sdn Bhd plans to build 400 to 500 telecommunications towers in its first year of operations in the Philippines via its new joint venture.

According to a statement, edotco has entered into an equity partnership with ISOC Infrastructure Inc in the Philippines named ISOC edotco Towers Inc, which upon completion would become a subsidiary of edotco.

Each company will invest up to US$100mil in the Philippines over the next three to five years, it added.

<Read more at https://www.thestar.com.my/business/business-news/2019/09/24/edotco-to-build-500-towers-in-first-year-of-philippines-operations#yfkHC7AzxeuK1sh0.99>

Correction now is another opportunity.

Few good news over next couple of months, better growth results (new tower recognition and improve tenancy), possible acquisition(s) and IPO proposal (improve value from proposed spin off), new construction towers (Myanmar & domestic), national fiberisation program(new constracts), edotco is hungry for new acquisitions for smaller towerco etc.