OWNERS' CAPITAL OUTLAY/SHAREHOLDERS' FUNDS
|
Before 2016 |
After 2016/17 | |
| Business segment | TNS | TNS + Towerco |
| Owners' Capital | RM250m | RM460m |
| Additional Capital (RI+PP) | RM200m | |
| Additional Loan (Towerco Expansion) |
RM280m |
|
| Total Capital (Owners' + Loan) for Telco | RM580m |
|
Towerco Business Expansion |
Before 2016 | After 2016/17 |
| Myanmar (No of towers) | 0 | 650 |
| Vietnam (No of towers) | WIP | 2000 |
| Myanmar Tenancy Ratio | 0 | 1.3x |
| Vietnam Tenancy Ratio | 0 | 1.2x |
| Further New Towers | 0 | 800 |
Towerco = independent tower company for telecommunication
EXPANSION PLAN (NOW 3,000 towers, incld. Malaysia)
1. Telenor still needs about 300 towers (Cost leader in Myanmar)
2. MyTel wanted OCK to build 300 towers
3. OCK intend to build additional 200 towers in Vietnam (SEATH)
4. Increase tenancy ratio
5. Improve costing in Vietnam
6. New acquistion or organic expansion to achieve 5,000 towers by 2020
7. Operating Cashflow is about 50-65% of Revenue (depends on tenancy)
ASEAN EXPANSION
Towerco biz benefited from Telco consolidation on its capex, i.e. moving towards sharing of towers. China benefitted substantially by taking down >500,000 towers by this sharing of towerco policy. ASEAN region is moving towards this direction.
Towerco biz benefitted substantially.
BUSINESS PERSPECTIVE OF TOWERCO BIZ
1. A kind of small "monopoly" business
2. Long term sustainable business/cash flow from 27 years based on Sale and Leaseback of Tower by Telenor & other major telco owners
3. Expansion in both number of units and tenancy ratio is great (still rooms for Myanmar and VIetnam)
4. EBITDA Margin or Operating Cash Flow is strong, 50-65% of revenue
5. Layman perspective, towerco is like a house with 3 rooms. The more tenants the better the rental. Cost of maintenance increase is marginal. Gross rental (revenue) can be 25% to 35% return on Invested Capital when it grows to its high tenancy ratio.
6. Depreciation of tower is 20 years. In reality, if maintained will can last 30 years plus.
WHAT VALUE IS THE TOWERCO (excluding TNS)?
UOB KayHian gave it about XXX million based on latest Jan/Feb 2018 research report. I will update it later. If I remember it correctly, the value of towerco exceeded today's market cap of OCK Group.
That means TNS average profits of RM25m to RM30m.
The price of OCK will be determined by the participants/investors. Good luck.
DISCLAIMER
Was informed that result for last quarter of 2017 will be out on Monday, 26 Feb 2018. This is for discussion only.
DIVIDEND
Normally the first few years for towerco (or other capital intensive projects like IPP, toll, water concessions, etc) will not give up any dividend due to high payment of principal and interest on loan (especially the gearing is high). Similarly the profits is lower (not attain its optimum profit), as they repayment of loan starts, the interest will reduce and the revenue will gradually pick up from new tenancy. So if you are an associate shareholder (luckily OCK is the majority shareholder of the towerco), don't expect any cash flow in the initial years.
However OCK gearing for Myanmar is low, if I am not mistaken is about 55%.
COMPARISON FOR REFERENCE @ 26 FEB 2018
| YEAR | PAT | PAT |
| 2012 | 13 | 13 |
| 2013 | 14 | 23 |
| 2014 | 16 | 28 |
| 2015 | 26 | 34 |
| 2016 | 29 | 37 |
| 2017 | 34 e | 37 e |
| 2018 | 39 f | 44 f |
| Mcap (RM) | 724 | 3,418 |
OCK vs GDEX
MCap 724m vs 3,418m (26 Feb 2018)
PE 25x vs 100x
P/BV 1.7x vs 7.8x
Biz TNS/Towerco vs Logistics (last mile)
Let's see the MCap next few years.
http://klse.i3investor.com/blogs/sosfinance/148385.jsp
