OCK: Orderbook Momentum and Strategic Initiatives Drive Positive Outlook

Despite 1QFY26 results that were somewhat below analyst and consensus forecasts, a robust increase in its orderbook and strategic corporate developments are setting the stage for stronger earnings momentum for the company in subsequent quarters. The company’s 1QFY26 PATMI (profit after tax and minority interests) stood at MYR6m, reflecting a 51% quarter-on-quarter increase, though a 15.1% year-on-year decline.

Performance Review

The first quarter’s financial performance was influenced by several factors. The strength of the Malaysian Ringgit led to lower translated revenue and EBITDA from the towerco business. Additionally, sequential weakness was observed across all segments. While the results were “light” against expectations, the quarter benefited from a deferred tax adjustment in the preceding period. Analyst commentary noted evidence of strong cost management contributing to overall EBITDA performance.

Orderbook Expansion and Future Growth Drivers

A significant highlight is the company’s outstanding orderbook, which has reached approximately MYR360m as of early November 2025. This represents a 69% quarter-on-quarter increase and marks the highest level since the pandemic. This expanded orderbook is expected to be a primary driver of earnings growth. The telecommunications network services (TNS) segment is poised for recovery following a two-year “lull” caused by 5G policy uncertainties. This recovery will be supported by existing projects, Wi-Fi connectivity initiatives for educational institutions and military camps, and anticipated awards from JENDELA Phase 2 (JP2) in FY26.

Strategic Developments

The company is actively pursuing key strategic initiatives to enhance value and expand its footprint. A major development is the planned initial public offering (IPO) of its 52%-owned power solutions subsidiary, El Power Technology (EIP), on the ACE Market in the first half of 2026. EIP, a leading provider of power solutions for data centers, serves hyperscalers and co-location data centers. Proceeds from the IPO are earmarked for a new head office and capital expenditure for expansion. Analysts estimate EIP’s potential valuation at MYR250-300m, or approximately 9-12 sen per share post-IPO based on the company’s effective 37% stake.

Further expanding its regional towerco portfolio, the company recently signed a sale and purchase agreement to acquire edotco’s Laos tower business. This acquisition includes 14 single-tenancy towers with rights for 30 build-to-suit sites, bolstering the company’s regional tower assets to over 5,500 sites.

Asset Valuation and Risks

Analysts believe the company’s tower business (OCKT) is significantly undervalued by the current market capitalization, estimating its worth at MYR760-905m, or MYR0.70-0.85 per share. This suggests that investors are currently acquiring the towerco for free. Key risks highlighted include weaker-than-expected earnings, delays in project execution, slower orderbook replenishments, and management execution.