OCK: Robust Order Book and Strategic Partnerships Drive Strong Performance, Target Price Raised
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
The company has reportedly delivered a strong financial performance, exceeding market expectations, bolstered by strategic growth initiatives and efficient operational management. A substantial order book and a healthy tender pipeline are expected to ensure sustained earnings visibility.
Performance Review
In 2QFY26, the company recorded a commendable 6% quarter-on-quarter revenue increase. This growth was primarily driven by a 15% quarter-on-quarter surge in non-recurring revenue, particularly from Telecommunication Network Services (TNS) projects. This robust top-line expansion was further supported by effective cost efficiencies, which contributed positively to the overall financial outcome.
The outstanding order book currently stands at RM652 million, with TNS accounting for 53% of the total, followed by Power Solutions (31%), Green Energy (15%), and Digital (2%). This diverse order book provides a solid foundation for future earnings.
Strategic Developments and Future Prospects
Looking ahead, the company is actively pursuing approximately RM2 billion worth of new tenders. TNS and digital services comprise 52% and 28% of these tenders, respectively, with additional opportunities anticipated from the Malaysian Communications and Multimedia Commission (MCMC). A key strategic pillar involves diversification beyond 5G, with an aggressive expansion into data centers and digital infrastructure to broaden its revenue base and capture high-growth opportunities. The total data center order book is valued at RM271 million, which includes RM71 million in DC fibre works and RM200 million in DC backup power.
A significant development is the company’s partnership with Fujikura Ltd., which is set to considerably enhance its fibre solution capabilities and support the deployment of high-spec fibre across Malaysia. This collaboration facilitates a technical shift towards data centre-grade fiberisation, strengthening the company’s positioning for federal and state smart city tenders. The company is actively eyeing two smart city projects and working closely with state entities for participation.
Challenges and Risks
Despite the positive trajectory, the company identifies several challenges and risks. These include potential unexpected delays in project rollout and execution, a slower-than-expected expansion of the tower portfolio, and the impact of weaker-than-expected margins. Furthermore, a softer utilization environment and regulatory changes could also pose headwinds to future performance.
Conclusion and Investment Outlook
Given its strong recurring income base, strategic diversification efforts, and active pursuit of new opportunities, analysts from TA Securities have reiterated a “BUY” recommendation for the company. The target price has been raised to RM0.25, representing a 25.0% upside from the last traded price of RM0.20, reflecting confidence in the company’s ability to capitalize on its strategic initiatives and robust market positioning.
