PhilipCapital Investment Bank, in its latest update on OCK Group, reported significant strides in the company's expansion strategy and robust growth prospects in the telecommunications sector.

The House maintained its BUY rating as OCK has successfully positioned itself to benefit from the widespread adoption of 5G networks, both domestically and internationally. The company is poised to capitalize on higher tenancy ratios in Malaysia, which are projected to increase from 1.5x to 1.6x, supported by new site deployments under the dual 5G network initiative. Moreover, OCK secured a contract for 100 new sites in Laos, with substantial progress expected by 2025.

Additionally, OCK is advancing in its data centre and digital solutions businesses, which are pivotal for its future growth. The company is actively pursuing data centre projects valued at RM50m, with a strong historical success rate. Furthermore, OCK has secured a significant 2.5MW Net Energy Metering (NEM) solar project, set to contribute from 2025 onwards. Its digital solutions arm also shows promising prospects with ongoing bids amounting to RM400m, including a notable contract for AI-based face recognition integration.

PhilipCapital maintains a positive outlook on OCK's earnings trajectory for 2024, underpinned by a robust order book of RM220m and favourable prospects in tower leasing and digital initiatives. The company's strategic focus on securing contracts in data centres and digital solutions presents near-term catalysts for potential growth. Therefore, PhilipCapital reiterates its BUY rating with an unchanged SOP-derived target price of RM0.85.

This valuation reflects PhilipCapital's confidence in OCK's ability to leverage its strengths in telecommunications infrastructure amidst the evolving landscape of 5G adoption and digital expansion initiatives.