OCK’s regional expansion viewed positively

PETALING JAYA: Analysts are positive on OCK Group Bhd, especially its regional business outlook and expansion plans in Myanmar.

Inter-Pacific Research Sdn Bhd, which upgraded its call to a “buy” with a revised target price of RM1.03, expects the group to benefit from network expansion locally in 4G and 2G, and 3G regionally.

“Its regional business outlook is positive with new contracts for colocation being secured from Telecom International Myanmar Co Ltd (MyTel) and newbuild tower sites added over and above the existing 920 Telenor Myanmar sites,” it said in its report.

During an analyst briefing held last Wednesday, the group said it plans to expand its pool of recurring income by increasing the number of telecommunication towers owned.

Note that OCK expanded its tower leasing business by securing two new telco operators in Myanmar namely Myanmar Post and Telecommunications (MPT) in April and MyTel in July.

The agreement with MPT comprises about 90 sites co-located while MyTel with about 70 sites co-located on existing Telenor Myanmar sites. MyTel has also allocated over 300 newbuild sites to OCK to be delivered by end-2017.

RHB Research, which maintained its “buy” call with a target price of RM1.01, expects regional revenue contribution to widen further from 36% in 1H17, driven by improved tenancies in Myanmar and Vietnam.

For the 300 towers to be built under the agreement with MyTel, OCK is expected to fund the construction of the towers and lease them to MyTel. Based on an estimated capital expenditure of RM80 million to RM90 million, RHB Research sees debt headroom given the group’s 2Q17 net gearing of 0.6 times.