KUALA LUMPUR: Phillip Research Sdn Bhd is positive on OCK Group Bhd's regional tower expansion plan, driven by the ongoing rollout of 5G both domestically and internationally.
The firm said OCK stands to benefit from higher tenancy ratios in Malaysia, projected to rise from 1.5 times to 1.6 times, alongside the deployment of new sites under the dual 5G network initiative.
"OCK has secured a contract for 100 new sites in Laos from Best Telecom, with 60 of these sites slated for completion by 2025.
"In Vietnam, the recent allocation of new 5G spectrum to Viettel and VNPT is expected to further bolster tenancy ratios to 1.6 times (up from 1.4 times).
"OCK has entered into a three-year contract with DigitalEdge to maintain 3,000 towers, expanding its total number of managed towers under its portfolio to 63,000," it said in a note.
It added that OCK's next major re-rating catalysts include securing contracts in data centres (DC), solar, and its burgeoning digital solutions business.
OCK is actively pursuing DC projects valued at RM50 million, with a historical success rate exceeding 50 per cent. This is expected to further bolster its DC orderbook of RM20 million.
The group has recently secured 2.5 megawatts Net Energy Metering (NEM) solar project, which is expected to start contributing in 2025.
"The prospects for its digital solutions business look bullish, with ongoing bids amounting to RM400 million. We gather that a significant portion of the bid value includes a payment system upgrade contract with AI-based face recognition integration.
"The successful contract award could pose further upside potential to our existing earnings forecast and add to its current order book of RM49 million," Phillip Research said.
The firm maintained "buy" on OCK with a target price of 85 sen.