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OCK Group Berhad (OCK - 0172), founded by Ooi Chin Khoon in the year 1999 with OCK Setia Engineering Services had expanded to what it is to be today, an established and leading telecommunication service provider in Malaysia and South East Asia. Throughout the journey, OCK had established it's front print in Singapore, Myammar, Indonesia and even China.

 OCK is involved in the construction of the infrastructure back bone for the huge and fast growing data hungry market. The market is so huge that it had propelled smart phone manufacturer - Apple and Samsung, to be one of the top 10 companies in the world, just by selling smart phone devices. The smart phone is so hotly sought after because of it's capabilities to act like a computer in a mobile manner. Huge amount of money are spent to develop applications to enhance the smart phone usage. However, all these will be rendered useless if there is not internet data to connect the user to the world of apps.

With such a big future ahead in this industry, how would OCK capitalize on this opportunity?

Let's have a quick look on OCK latest price chart.

As you would see, OCK had been trading on a consolidation basis in the past 6 months, at the range of RM 0.82 to RM 0.94. OCK had saw it's liquidity improved after a bonus issue in the late November 2014. Currently laying at the lower range of the consolidation zone, OCK could be looking to see a stronger participation amidst an improved sentiment in the KLSE, which could bring it to challenge a psychological barrier of RM 0.90.

 
On a technical front, OCK can be seen here trading at a tight squeeze of the Bollinger Band. A strong surge that break the upper band of RM 0.87 will mark a start of a good trend in OCK after a 6 months long consolidation. The MA20 and MA50 is also trending towards a making of crossover in the coming days as the gap closed on. With RSI trying to break above the 50% range for 3 times, a good volume could put OCK on a bullish mark, with RSI going towards and above the 70% region. Technically looking at it, all the technical indicator are showing a readiness to turn bullish in the coming days.


OCK - Diary of a "Data Hunger Game"

According to the research of Business Intelligence, the number of device that will be deployed will be seeing a CAGR of 35% growth from 2014 to 2019. We had witness the sale of smartphones from Apple which are growing in an epically tremendous manner. The latest iPhone 6 and 6 plus had saw Apple selling more than 75 million units globally, while Samsung S6 edition which had just officially launched had garner no less than 20 million units as well.

The demand is strong. With human being wanting to get connected with the social world, work, games and news, there is no space to see a slow down in this industry, which will automatically cries out for a stronger network coverage that is able to cater for more data hungry user in the future.

According to CISCO reports, it is estimated that the mobile data traffic will hit a staggering 24.3 Exabytes per month in 2019, putting a 57% CAGR from 2014 to 2019. (1 exabyte = 1 000 000 000 000 000 000 bytes), and 2015 is still considered as a pioneering stage from the big leap.

With all this globally highlighted demand in the market, the only solution to address the coming demand is by
i ) Using higher bandwidth data spectrum
ii) Deploying more platform / tower to increase coverage and support data load


A Game Changing Chapter - From Build and Sell to Build and Lease

Previously, the industry does not favor a Build and Lease model as there isn't a good economy of scale with the 2G and 3G coverage tower. 2G and 3G network bandwidth can travel far, however, slower in sense of data. With the rising up of 4G 4.5G and an upcoming 5G which is still under research from the Korean, there is a rising need of more platform to host the modem to cater for more stable coverage.

With this uprising demand, OCK sees it as a strong game changer as it can build more platform / towers and lease out the sites for a residual recurring income. The great thing about this strong business model is that it can be considered as a super highly defensive stock in the midst of an economy downturn, as it's clients are mobile operators seeking to expand network coverage, hence it's contract are stable with revenue derived from strong sources, putting the less likelihood of a default payment from it's clients.

How attractive is the Build and Lease model?

Assuming a 15 meter tower catering a platform for 6 modems. The engineering, procurement, construction and commissioning of 1 tower might cost around RM 350k to RM 500k, depending on location. Let's take a higher average of RM 400k per tower as the cost of investment.

Leasing out the site to operators, assuming a skeptical 6 modem per tower (1 modem covering 120 degree, x 3 = 360 degree, and 2 layer) at a an average rate of RM 1000 per modem. (Some area can fetch RM 2k to RM 3k, while some area might fetch as low as RM 500) will generate a residual income of RM 6000 per month, RM 72,000 per year.

The business model will see a gross ROI of 18% based on a skeptical calculation of RM 400k investment per tower generating RM6k in leasing income per month. When you start to put this model in Malaysia, Indonesia, China, Singapore and Myammar, that will sum up to an explosive recurring income.

The Build and Lease business model will be liken to transform OCK to a "Telco REITs" in the future.


Strong Growing Fundamental

OCK continued to display strong growth for the past 5 years, outlining the company is at the right direction, right industry and having a right management.

Based on the growth of OCK and the coming opportunity in the market, it is just a starting point for the time being. Currently, OCK had been operating under a Gross Profit Margin around 25% from it's revenue for 4 years.

OCK is another making of Timecom, conquering the mobile data industry.
 (Timecom, from RM 2.7 at the end of Dec 2012 to RM 7.2 in July 2015)
Conclusion
OCK is a very good stock to be held for a long haul. Considering the current growing opportunity in the mobile data industry. With RM 3 billion in budget 2015 allocated to build 2,000 telco tower in rural area, OCK is on a high ride to win a big portion of the contracts which is awarded in phases. OCK is a top stock to be invested based on:
- Local demands with more than 2,000 telco tower to be built under Budget 2015
- Explosive growing market demand for mobile data, which could see more than 10,000 sites to be added in Malaysia alone.
- OCK exposure in international market, such as Indonesia, Myammar, China and Singapore
- OCK to channel more residual income through build and lease model
- OCK investment in renewable solar energy to create more recurring income
- Strong underlying fundamental with strong balance sheet
- OCK to be dubbed the Telco REIT in the future from the recurring income from the leasing model
Tapping into the growing window of OCK right now is the best opportunity. OCK will be banging above RM 1.20 in the days to come, with long term TP at RM 1.50
Tap in with the data fever? You decide
Bone's short term TP : RM 1.00
Cheers and have a nice day

Regards,
Bone
 
 OCK, 0172 - OCK - Data Revolutionized 

http://bonescythe.blogspot.com/
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