KUALA LUMPUR (July 4): Philip Research reaffirmed its positive outlook on OCK Group Bhd (KL:OCK), projecting significant gains from widespread 5G adoption and a record-breaking year in 2024.
The research firm said the record performance will be supported by the group's RM220 million order book, while citing a positive outlook in tower leasing, interest cost savings, and robust solar and digital solutions business prospects.
"We remain positive on OCK’s regional tower expansion plan, driven by the ongoing rollout of 5G both domestically and internationally," said the research house in a note on Thursday.
It has a "buy" call with an 85 sen target price on the stock, which closed at half a sen or 0.9% higher at 58.5 sen on Wednesday, valuing the group at over RM626 million.
The firm noted that OCK stands to benefit from higher tenancy ratios in Malaysia, projected to rise from 1.5 times to 1.6 times, alongside the deployment of new sites under the dual 5G network initiative.
Philip Research noted that OCK has secured a contract for 100 new sites in Laos from Best Telecom, with 60 of these sites slated for completion by 2025.
In Vietnam, the recent allocation of new 5G spectrum to Viettel and VNPT is expected to further bolster tenancy ratios to 1.6 times (up from 1.4 times). OCK has entered into a three-year contract with DigitalEdge to maintain 3,000 towers, expanding its total number of managed towers under portfolio to 63,000.
Strong pipeline of jobs from data centre, digital solution business
OCK’s next major re-rating catalysts include securing contracts in data centres, solar, and its burgeoning digital solutions business.
Philip Research said OCK was “actively pursuing” data centre projects valued at RM50 million (or 7% of 2023 revenue), with a historical success rate exceeding 50%.
The house said the projects are expected to further bolster its data centre order book of RM20 million.
Notably, OCK has recently secured a 2.5 megawatt (MW) Net Energy Metering (NEM) solar project, which is expected to start contributing in 2025.
"The prospects for its digital solutions business look bullish, with ongoing bids amounting to RM400 million. We gather that a significant portion of the bid value includes a payment system upgrade contract with AI-based face recognition integration.
"The successful contract award could pose further upside potential to our existing earnings forecast and add to its current order book of RM49 million," the research house added.