This article first appeared in The Edge Financial Daily, on March 16, 2016.

OCK Group Bhd (-ve)

SHARES of telecommunication network services provider OCK (fundamental: 2.4/3; valuation: 1.1/3) rose 10.35% to 80 sen yesterday with 12.5 million shares done.

 For the fourth quarter of financial year 2015 (4QFY15), revenue increased an outsized 87.2% year-on-year to RM108.4 million while net profit surged 86.6% to RM12.3 million, thanks to higher domestic and regional revenue from telecommunication network services and an unrealised revaluation gain of RM4.7 million on investment properties.

 The company declared an interim dividend of 0.6 sen per share for FY2016, translating into a dividend yield of 0.8%. The dividend will go “ex” on March 28 and will be paid on Apr 14. Having completed its rights issue to raise RM132.0 million for business expansion and working capital in December 2015, it has turned net cash in 4QFY15 with a net cash position of RM75.2 million.

 As a network facilities provider (NFP) licensee, OCK builds, owns and leases back telecommunication towers and rooftop structures to the eight telecommunication operators in Malaysia. Despite its venture into green energy and provision of mechanical and electrical services to construction sector, telecommunication network services remain its main earnings driver, accounting for almost all of its total profit in 2015.  

 OCK stands to benefit from the networks expansion undertaken by major telecommunications companies, which are expected to invest heavily to expand their 3G and LTE (Long-Term Evolution) coverage in Malaysia over the next few years.  Additionally, OCK also seeks to expand its regional business in ASEAN and China to tap into the growing demand for telecommunication towers in these emerging markets.

 Established in 2000 and listed in 2012, OCK is 39.8%-owned by Aliran Armada Sdn Bhd and 13.6%-owned by Lembaga Tabung Angkatan Tentera. The stock currently trades at a trailing 12-month P/E of 23.4 times and 1.71 times book value.