OCK expected to continue benefitting from rapid networks expansion projects locally

KUCHING: OCK Group Bhd is expected by analysts to continue benefitting from rapid networks expansion projects locally as well as higher contribution from the group’s overseas ventures.

In a results note, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) affirmed that OCK is expected to continue benefiting from the rapid network expansion plan undertaken by the local major telcos.

“We understand that the group aims to grow its recurring revenue business via own-build towers and acquiring existing tower sites operators in Asean countries,” Kenanga Research said.

“Apart from focusing on the telecommunication business, we understand that the group is also sourcing for more business and/or investment opportunities in the sustainable energy sector which is rapidly growing in demand.”

On OCK’s financial year 2016 (FY16) performance, the group’s profit after tax and minority interests (PATAMI) of RM25.8 million came in well- within Kenanga Research’s expectation at 100 per cent but below market consensus full-year estimates (at 92 per cent).

The research arm believed this was mainly due to lower-thanexpected effective tax rate and/or non-controlling interests.

All in, Kenanga Research maintained its ‘outperform’ call with unchanged discounted cash flow ( DCF)- driven target price of RM0.96 per share for now, pending the analysts’ briefing.

“Having said that, we are likely to tweak our FY17E earnings forecast marginally post housekeeping,” it said.

Kenanga Research continued to like OCK for the group’s healthy cash flow on the back of escalating recurring income trend, spreading its wings in Myanmar and across Southeast Asia, its ability to ride with the passive infrastructure sharing trend, its earnings before interest, tax, depreciation and amortisation (EBITDA) margin expanding trend and potential growth through merger and acquisition (M&A) activity.