OCK group’s overseas revenue seen rising three-fold

PETALING JAYA: OCK Group Bhd’s overseas revenue contribution is expected to rise three-fold by financial year 2018 (FY18), from under 16% of the group’s revenue in FY15, said RHB Research.

This is due to the group’s telco network services segment likely remaining as the key earnings driver with a FY16 to FY18 revenue compound annual growth rate of 37% projected for its regional tower communication assets.

“The threefold rise in overseas revenue contribution should also propel recurring revenue for the group to some 38% in FY18 from under 20% currently.

“OCK’s telco network services segment contributes over 80% of the group’s revenue and 95% of profit after tax and minority interests,” said RHB Research.

As at November 28, OCK has successfully transferred 405 sites to Telenor, with another 200 targeted for delivery by end-December.

OCK’s delivery targets have been revised downwards due to network replanning by Telenor, which entail longer processes to obtain building permits as well as rainy season.

Apart from that, RHB Research reported that discussions with Myanmar Post & Telecommunications and Ooredoo on co-locations have commenced.

This would improve tenancies and lease rentals going forward, as Telenor’s site exclusivity expires after two months.

“There is upside risk to earnings should OCK secure additional orders from Telenor, given the latter’s commitment to meet the 75% population coverage by 2018 as mandated by the government,” said RHB Research.

For the third quarter of FY16, OCK registered revenue and net profit of RM101.9mil and RM5.5mil, respectively.

Its revenue for the quarter was mainly attributed to higher contracting works in Malaysia within the TNS segment.

UOBKayHian expects higher TNS earnings for the group from 2017 onwards with the inclusion of Southeast Asia Telecommunications Holdings and Myanmar tower-co.

“TNS pretax profit for the quarter improved by 3 percentage points quarter-on-quarter to 12.5%.

“This reflects optimal cost rationalisation exercise within the group, with measures that include ensuring project staffs are assigned at all times, and negotiating better pricing with suppliers.

“Recall that TNS margins were under pressure as Malaysian telcos underwent intense competition in thr second half of 2015,” said UOBKayHian.

Meanwhile, OCK’s net profit for the cumulative nine-month period stands at RM14.6mil.

In the past, the group’s fourth quarter earnings accounted for 35% to 40% of its full year earnings.

Hence, a surge in orderbook is expected towards the fourth quarter.

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