OCK to improve revenue growth

by HARIZAH KAMEL / pic credit: ock.com.my

OCK Group Bhd is optimistic its financial year 2021 (FY21) total revenue and net profit will improve on tower revenue growth, turnkey contract wins and solar acquisitions with the share of recurring revenue rising to 70%.

CGS-CIMB Securities Sdn Bhd said Bloomberg consensus sees forecasts for 2021 and 2022 (FY21F/FY22F) core net profit (CNP) rising 11.4% and 3.9% year-on-year (YoY) respectively.

“While Covid-19 lockdowns have hit its trading/mechanical and electrical (M&E) engineering units, OCK’s FY20 revenue was stable YoY, aided by the 11%/62% YoY jump in its tower leasing/managed services revenues.

“The latter was due to contract wins from Ericsson in Indonesia,” it said in a recent report. OCK’s FY20 CNP eased 3.1% YoY as depreciation rose.

The group has sights on further top-line growth for tower leasing in FY21 with its tower portfolio spans a total of 4,240 towers in Malaysia, Vietnam and Myanmar with blended tenancy ratio at 1.3 times by the end of FY20.

“It sees tower leasing revenue rising further by 21% YoY in FY21 on 910 total tower additions and blended tenancy ratio inching up to 1.4 times, according to its CGS-CIMB Corporate Day investor presentation,” said CGS-CIMB.

During the same briefing, OCK said this does not include its bid for around 200 of the total 1,661 sites in the Jalinan Digital Negara (Jendela) 1 tender while it could also build/lease some towers to government 5G special-purpose vehicle Digital Nasional Bhd.

The Malaysian National 5G Task Force report published on Dec 31, 2019, estimated that 1,000 new 5G radio sites would be needed to achieve a mature 5G network.

CGS-CIMB noted that as one of the main turnkey contractors for network rollout for the mobile network operators (MNOs) and Telekom Malaysia Bhd, OCK believes it could secure more work as telcos strive to meet Jendela targets in 2021 until 2022.

These include addition of 193 new 4G sites in 2021, upgrade of 12,500 2G/3G sites to 4G in 2021, and fiberisation of 1.2 million or 930,000 premises in 2021/22.

OCK said it has begun working with mobile network operators to identify areas for Jendela network rollouts and recently received site fiberisation orders from Maxis Bhd and Celcom Axiata Bhd.

The group is also in talks to potentially buy two solar farms in Malaysia, which it expects may boost its combined capacity by 3MW.