OCK Group on the right track for growth

PETALING JAYA: Analysts have reiterated their “outperform” call on telecommunication network service provider OCK Group Bhd, stating that its latest intended foray into Laos bodes well for the company.

Kenanga Research in a report to clients said the development underscores the market’s recognition of OCK’s capabilities in the telco infra space both at home and abroad.

“There is no change to our earnings forecast as this development is still in its infancy; thus, target price is maintained at 95 sen,” the research house said.

In the report, Kenanga Research said it was “highly positive” on the development.

“It is timely as the region looks set to recover post-pandemic with telco infra one of the catalysts for growth both domestically and regionally.

“OCK currently has presence in Myanmar, Indonesia and Vietnam with the former paving the way to its presence in the Indo-China market.

“We understand also that OCK intends to tap into the 5G industry in Laos following in the same footsteps in the Vietnamese 5G,” Kenanga Research said.

It said it continued to like OCK for its “tremendous” growth opportunities in the telco infrastructure space in Vietnam and Myanmar that are still relatively under-served especially in the rural areas.

Additionally, according to the research house, the company is being well positioned to benefit from the Jendela initiative and 5G rollout in Malaysia.

Other factors that are compelling include earnings stability and visibility with about 63% of its revenue being recurring from telcoms tower maintenance (55,000 towers of which about 80% are in Indonesia) and telco tower leasing, it being a proxy play to the relocation of Indonesia’s new capital city to Kalimantan in terms of telcoms infrastructure, given its dominant market position in Indonesia (45% market share in the telco tower maintenance space currently), and potential business opportunities in the Philippines, Kenanga Research said.

It was reported that OCK has inked a shareholder agreement with the Laotian Ministry of Finance to expand its presence in Laos.

Under this agreement, OCK is expected to set up a joint venture (JV) company – OCK Laos TowerCo Co Ltd, in which OCK will hold a majority stake of 70%, with remaining 30% held by the Laos’ Finance Ministry.

The setting up of this JV company is expected to pave the way for OCK to apply for a tower licence to erect and own towers in Laos.