Stock Idea - OCK Group

Date: 
2024-02-23
Firm: 
AmInvest
Stock: 
Price Target: 
0.70
Price Call: 
BUY
Last Price: 
0.58
Upside/Downside: 
+0.12 (20.69%)

Company Background. OCK Group (OCK) is principally involved in the provision of telecommunication services equipped with the ability to provide full turnkey services. The group’s services encompass various aspects of the telecommunication network services market, including network planning, design, optimisation, deployment, operations, maintenance, energy management and infrastructure management. OCK has 4 major business divisions: (i) telecommunication network services, (ii) trading of telco & network products, (iii) green energy & power solutions, and (iv) M&E engineering services.

Prospects. (i) As a leading telecommunications solutions provider, OCK expects heightened activity in Malaysia's telecommunication industry via initiatives like Jalinan Digital Negara and Digital Nasional Berhad (DNB). As of November 2023, OCK's order book of RM277mil is expected to further grow with the transition to a dual wholesale network and DNB's efforts to enhance the nation's 5G coverage, (ii) OCK currently owns over 5,300 telecommunication sites across Myanmar, Vietnam, and Malaysia. Additionally, it has recently ventured into Laos to further leverage its regional growth, and (iii) OCK has the capability to build and own solar farms in the renewable energy sector. Currently, the group owns 29 solar farms in Malaysia with a total capacity of 14MW.

Financial Performance. In 9MFY23, OCK posted higher revenue of RM554mil (+28% YoY) with a PAT of RM29mil (+24% YoY). This was mainly due to higher revenue contribution from telecommunication network services and green energy & power solutions segments as well as M&E engineering services.

Valuation. OCK is trading at an attractive FY24F P/E of only 6x, which is lower than its 5-year forward average of 15x and Bursa Telecommunications & Media Index’s 24.9x currently. As a comparison, Binasat Communications, which is involved in telecommunication services including network support design & installation, trades at a much higher trailing P/E of 45x. Technical Analysis. OCK may rise higher after reaching its new multi-year high with a long white candle a few sessions ago. The stock’s move above the RM0.54 resistance coupled with rising EMAs indicates that the near term upward momentum may persist. A bullish bias may emerge above the RM0.54 level with stop-loss set at RM0.49, below the 50-day EMA. Towards the upside, nearterm resistance level is seen at RM0.65, followed by RM0.70.

Technical Analysis. OCK may rise higher after reaching its new multi-year high with a long white candle a few sessions ago. The stock’s move above the RM0.54 resistance coupled with rising EMAs indicates that the near term upward momentum may persist. A bullish bias may emerge above the RM0.54 level with stop-loss set at RM0.49, below the 50-day EMA. Towards the upside, nearterm resistance level is seen at RM0.65, followed by RM0.70.

Source: AmInvest Research - 23 Feb 2024

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