KUALA LUMPUR: Kenanga Research has maintained its 'outperform' call on OCK Group Bhd following the company's new digital business which offers end-to-end services, including connectivity solutions.
OCK's digital unit currently has a tender book of around RM300 million to RM400 million, which consists of smart city solutions, managed service, connectivity, and cloud.
The corresponding market for OCK's pool of tenders mainly comprises the government, with an estimated 90 per cent share.
This includes state and federal governments, as well as various ministries.
"The key competitive advantage of OCK's digital unit lies in its capability to provide full stack services, including network connectivity solutions. Hence, this enables OCK to manage the entire infrastructure lifecycle, from planning and design to implementation, maintenance, and optimisation, " it said in a note.
"This is possible via leveraging on the group's existing resources, such as engineering expertise and manpower. After accounting for time needed for project deployment, OCK expects earnings contribution to materialise within the next two years, by 2025," Kenanga Research said.
The research firm added OCK offers end-to-end cloud services to its clients, encompassing consultation, design, building, and operation.
"We understand that with the exception of Huawei Cloud, international cloud service providers (CSP) interact with end users in Malaysia through local partners such as OCK. As such, these CSPs do not directly engage with Malaysian end-users.
"Therefore, after the handover of cloud projects, OCK may continue to receive recurring fees from its clients for services including cloud artificial intelligence, connectivity solutions, managed services, and cybersecurity," the note said.
Licensing fees to the CSPs are expected to constitute only a small portion of the total fees," it said.
Kenanga Research kept its target price for OCK at 86 sen.