OCK Group maintained its BUY recommendation from RHB Investment Bank (RHB), with an upgraded target price of RM0.82, indicating a potential upside of 33% alongside a projected 2% yield for FY24. The firm's focus on expanding its digital footprint is set to propel earnings, complementing its robust site leasing business thriving on 5G deployments across Malaysia and Indonesia.

Investors can anticipate substantial growth from OCK Group's venture into digital services, with expectations of triple-digit revenue over the next two fiscal years. This initiative is bolstered by a MYR300-MYR400 million tenderbook, featuring government and enterprise projects, underpinned by the company's end-to-end capabilities in infrastructure and connectivity solutions.

OCK has also secured significant contracts in the data centre (DC) sector, with an orderbook exceeding MYR20 million. The company stands to benefit further from the escalating demand for ancillary power solutions amid expansions by hyperscalers and global co-location providers in Malaysia.

RHB has adjusted upwards its earnings forecasts for OCK Group, reflecting stronger contributions from digital ventures starting in 2H24. This revision anticipates digital revenues to grow from approximately 2% in FY24 to 7% and 11% in FY25 and FY26, respectively, driven by new projects and commercialisation efforts.

The outlook for OCK Group remains positive RHB said supported by a substantial outstanding orderbook exceeding MYR200 million, primarily driven by telco network services (TNS), educational contracts, and DC-related projects. With a tenderbook exceeding MYR550 million, including digital initiatives, TNS, and DC tenders, the firm is well-positioned for sustained growth in its key segments.

RHB's revised target price of MYR0.82, incorporating a 2% ESG premium, underscores OCK Group's compelling valuation at 4.6x FY25F EV/EBITDA. This assessment considers the company's strong market position and growth potential in digitalisation and infrastructure services.