3. OCK Group Berhad

Figure 1: OCK Group Berhad

OCK Group was established in year 2000 and is headquartered in Shah Alam, Malaysia. In 2012, OCK Group was listed on the ACE Market of Bursa Malaysia on the 17^th July and was being transferred to MAIN Market in year 2014.

Figure 2: Four Core Businesses of OCK Group Berhad

OCK Group Corporate Structure

Figure 3: OCK Corporate Structure

Telecommunication Network Services (TNS)

As a Network Facilities Provider (NFP) Licensee, OCK Group is able to build, own and rent telecommunication towers and rooftop structures to the 8 telecommunication operators in Malaysia.  This is the core business for OCK Group that makes its business growing fast. OCK Group is the leading company to supply for telco network services in Malaysia. Below is the clients list for OCK:

Figure 4: OCK Malaysia Client List

Besides building towers in Malaysia, OCK Group also expands their footprint in telecommunication services in Cambodia (OCK Phnom Penh Pte Ltd), Myanmar (OCK Yangon Pte Ltd), Indonesia (PT Putra Mulia Telecommunication), China (Fuzhou1-Net Solution Co Ltd) and Vietnam (SEATH) after acquiring SEATH.

Tenancy Ratios

In the investment on the telecommunication towers company, tenancy ratios of the towers are the key value driver. Tenancy ratio is the number of tenants per tower. It means that with the same number of towers, if the company can attract more tenants which are the telecommunication operators, it can increase its recurring income without incurring extra capital cost, thus improving its profit margin at the same time.

Tenancy ratio refers to the number of tenants (operators) who have put up their antennae and other active infrastructure on the towers. The more the number of tenants, the higher the rent and hence, the shorter the payback period for the telecom tower company.

Figure 5: Tenancy Ratio Reference

Green Technology and Solar

Figure 6: OCK Solar Farm

OCK has ventured renewable green energy by building the solar farm. Up to date, OCK operates 9 solar farms with a total energy output of 5.3MW. Besides, OCK has successfully completed building a 10MW solar farm located in Sepang. This is one of the core businesses that Mr. Ooi emphasizes in OCK recurring income business model.

Figure 7: Press Reader News

Trading of Telco & IT Products

OCK also supplies antennas, feeder cables, connectors and water-proofing tapes. It also customizes metal structure for cable ladders, boom, heat exchanger or air cooled outdoor cabinet. Currently, OCK is Rosenberger RF, optical and structure cable products distributor in Malaysia.

M&E Engineering Services

OCK also provides civil and M&E services to hospitals, commercial and residential high rise buildings, factory, airport and hotel. Its M&E services mostly on electrical services, air-conditioning and mechanical ventilation systems and fire fighting protection system.

Revenue Analysis

Figure 8: OCK Revenue from 2012 to 2016

Figure 9: OCK Segment Revenue

OCK has been showing consistent growth in its revenue and PAT over the years with average 47% and 29% growth in the past few years. As in the above figures, the biggest revenue contributor to OCK is from Telecommunication Network Services (TNS) which is around 80%. To order to have significant increase in OCK revenue, OCK must perform in its TNS sector.

Figure 10: OCK Geographical Revenue

From the latest annual report 2016, all regional businesses of OCK including Malaysia are showing growth, especially in Malaysia with growth of 22%.

From the revenue according to segments, OCK is showing significant growth in TNS and lease of telecommunication towers due to new recurring revenue from Myanmar after delivering 608 towers to Telenor.

OCK Future Prospects

Malaysia

Figure 11: The Star News August 2016

Currently OCK has 144 towers in Malaysia. According to MD of OCK, OCK has orderbook of 350 new sites and by end of 2016, another 130 new towers will be ready. It means that the recurring revenue for OCK in Malaysia is keep increasing in long term.

Myanmar

In December 2015, OCK partnering with King Royal Technologies (KRT), signed agreement with Telenor Myanmar to construct 920 sites under a build and lease model. This means that it will provide long term recurring income to OCK for the telecommunication tower rental. OCK plans to build 3000 towers over a five year period until 2020 at Myanmar.

Figure 12: Myanmar Tower Numbers

In Myanmar, OCK has successfully delivered 608 towers to Telenor as at March 2017 and 920 towers at the end of 2017 to Telenor. This means that by this year, OCK will have another source of recurring revenue from Myanmar. Telenor has built 6,900 sites across Myanmar, and it might need to build another 9,000 sites in order to deliver solid nationwide and data coverage. Here comes the potential of the collaboration between OCK and Telenor in long term relationship after the first 920 towers contract. OCK aims to build 3,000 towers at the end of 2020 in Myanmar.

Vietnam

Figure 13: SEATH Acquisition

OCK Group completed the acquisition of SEATH Vietnam at the end of 2016. SEATH Vietnam is one of the largest telecommunication network provider with 1968 towers (latest number of tower). Vietnam is one of the largest telecommunication growing market in ASEAN.

Figure 14: SEATH Information

Vietnam is at a relatively early stage of its development as an independent towerco market. It is at early stage 3G environment with smartphone penetration at 25% in year 2016. SEATH is one of the biggest telecommunication towers company in Vietnam. OCK has very huge potential to expand their footprint here.

According to Global Mobile Economy Report 2015, telecommunication operators have been heavily investing in infrastructure over the last three years to fully support the mobile broadband network deployment and that they are expected to spend US$1.4 trillion on capital expenditure up to year 2020 for 4F LTE and fibre optic to meet customer demand.

Indonesia

Acquisition of PT Putra Mulia Telecommunication (PMT) in 2014 has provided OCK with rapid expansion into Indonesia. PMT is now managing 20,000 sites as on 31^st December 2015. This provides the recurring income for OCK Group for managing the existing sites. And PMT is now still expanding. At Indonesia, there are total of 120K tower. So, PMT still has potential to increase the total number of towers under its managed service.

Figure 15: TNS potential at India and Indonesia

According to Moody’s, Indonesia tower operators is expected to have year-on-year revenue growth of about 8-10% in next one to two years. The acquisition of PT Putra Mulia Telecommunication (PMT) by OCK Group provides the huge potential growth for its revenue.

Expected additional revenue from acquisition of SEATH

Figure 16: SEATH Financial Report

According to the financial report of SEATH, the PAT for first four months of SEATH in year 2016 was RM 2.706 million. We can estimate that in first quarter, the average PAT per month is RM 0.6765 million. Let us make a rough estimation that there is at least RM 2.03 million PAT in SEATH in first quarter. With 60% stake in OCK Vietnam, it means that there will be around RM1.22 million to be shown in the OCK 1^st quarter report in coming May 2017.

Figure 17: OCK Quarter PAT

Figure 18: OCK Quarter PAT Table

In the 1^st quarter of OCK in year 2016, PAT of OCK was RM 4.536 million.

With the assumption:

•       RM 1.22 million by SEATH to be included into the 1Q of OCK
•       OCK 1Q PAT maintained at RM 4.536 million in other regions

Estimation 1Q PAT will be at least RM 5.756 million with growth of 27% breaking the new high in its profit in 1Q. This has not included the growth in its own regional area for telecommunication towers and other core businesses of OCK.

Stock Valuation

Figure 19: Historical PE Ratio of OCK

The average historical PE of OCK is at 21.44. Diluted EPS at 2016 is 3.15 sen. With the acquisition of SEATH and TNS sector growth regionally, we assume that OCK PAT growth in 2017 can be can be maintained at average of 29% with reference to the last few years, the forward EPS in 2017, 2018 and 2018 is 4.10, 5.32 and 6.90.

In OCK forward PE, we can use PEG ratio (price/earnings to growth ratio). It is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share (EPS), and the company's expected growth. In general, the P/E ratio is higher for a company with a higher growth rate. As OCK growth is average at 29% in PAT, we can expect the highest forward PE of OCK is 29 for PEG = 1.

Financial Year	Forward EPS	Stock Price (Average PE = 21.44)	Stock Price (PEG=1; PE = 29)
2017	4.10	0.88	1.19
2018	5.32	1.14	1.54
2019	6.90	1.48	2.00

If OCK growth is maintained at 29% in PAT, OCK stock price should be in the range of RM0.88 to RM1.19. If SEATH contribution is higher, with the greater growth in Malaysia TNS market, we can re-evaluate OCK stock price. Q1 report will be very good to know about SEATH contribution.

Conclusions

OCK Group is very focusing to expand their footprint regionally as they have put their marks in China, Indonesia, Vietnam, Myanmar, Singapore through acquisition and cooperation with the local telecommunication company.

The future of OCK is mainly depending on the growth in the telecommunication area. As the number of smartphone users worldwide is growing rapidly, it means that Telco companies need to upgrade their TNS to support their users in terms of mobile data usage. This will support OCK growth in the near future. As mentioned above, OCK has new order book of 300 sites in year 2016 in Malaysia. Riding on the wave of demand of faster speed, Malaysia's MNOs will deploy a total CAPEX of RM 3.2 billion in year 2017. 

Another main point of OCK is that OCK is always focusing on the recurring income for its revenue. Once the towers built up is getting more and more, this income for OCK will be its stable source of income as its build and lease model.

*Disclaimer: Please do your own homework before investing in OCK. This research writing is not buy or sell call.

2. P.I.E INDUSTRIAL BERHAD

Figure 1: PIE Industry Berhad

P.I.E Industrial Berhad (PIEIB) was incorporated in Malaysia on 21 March 1997, and become public listed company on 30 May 1997.

Figure 2: PIE Group Structure

Their group business activities are:
1. Assembly of Various Types of Cables (Medical, telecommunication and PC-related product)
2. Electronic manufacturing and testing of various electronic products
3. Manufacturing of wires and cables for various industrial applications

Figure 3: PIE Largest Shareholder

P.I.E Industrial Berhad (PIEIB) is Taiwanese Holding Company by Pan Global Holding Co. Ltd (51.42% holding). Pan Global Holding Co. Ltd is actually the holding company of Foxconn Technology / Hon Hai (鸿海集团) by Terry Gou (郭台铭). Foxconn Technology is the largest shareholder for Pan Global. The below companies in red box are all related to Foxconn Technology.

Figure 4: Foxconn Share Holding in Pan Global Holding Co. Ltd

As in August 2016, Foxconn Technology took over Sharp Japan. Pan Global started to receive orders from Sharp Corporation. In just 3 months, Pan Global received orders from Sharp Corporation NTD 125,077,000. As Sharp Corporation is starting to turnover from loss to profit this early year after taking over by Foxconn, does it mean that Sharp Corporation will give bigger orders in near future?

Sharp is the major supplier of LCD panels to Apple Inc. As we know Foxconn is the major partner to Apple Inc, with the acquisition of Sharp Corporation, Foxconn has become more reliable partner to Apple and strengthen their business relationship. This will create chain reaction to Pan Global and therefore to P.I.E industry business.

Figure 5: Sharp Corporation Order to Pan Global Holding Co. Ltd

Below are Pan Global revenue in year 2015 (104) and year (105).

Figure 6: PIE Contribution to Pan Global Holding Co. Ltd

According to year 2015 (104) and year 2016 (105), the revenue contribution of P.I.E Industry to Pan Global Holding Co. Ltd total revenue is average 10.33%. The revenue from Malaysia in Pan Global is only 51.42% of the total revenue of P.I.E as Pan Global only has 51.42% of stock holding.

 

Figure 7: Pan Global Holding Co. Ltd Monthly Revenue year 106 (2017) and 105 (2016)

Figure 8: P.I.E Latest 10 Quarter Results

As Taiwan public listed company needs to submit their financial report monthly, this actually can provide us the opportunity to estimate the revenue of P.I.E based on latest three months financial report by Pan Global by finding out P.I.E revenue contribution percentage to Pan Global.

Figure 9: PIE VS Pan Global Holding Co. Ltd in Revenue

According to the chart above, the revenue of PIE and Pan Global are corresponding. When the revenue of Pan Global is increasing, the revenue of PIE is increasing too, and vice versa.
Below is the table to show the revenue contribution in percentage based on historical results.

Table 1: PIE Revenue Contribution in Percentage and Estimate Revenue of PIE in Q1 2017

If based on average revenue contribution of 10.50%, can we assume that P.I.E coming Q1 2017 Quarter Revenue will be around RM153,381,000? As YOY comparison in 2016 (RM 119,725), the revenue growth will be at least 28%? This estimated revenue will be one of the highest revenue in Quarter 1 in company history except in year 2014 (RM157,367).

 

In the latest quarter report (Sep 2016 to Dec 2016), P.I.E has net foreign exchange gain of RM6,386,000. Based on the chart, the USD range is RM4.10 to RM4.45 from Sep 2016 to Dec 2016. From Jan 2017 to Mar 2017, the USD range is RM4.42 to RM4.45. P.I.E is expected to have good foreign gain in coming quarter report too.

Figure 12: PIE Currency Risk Sensitivity Analysis year 2015

From The Star Newspaper, PIE is now negotiating four major projects and targeting for more than 15% growth in year 2017.

Figure 13: PIE eyes four big projects

These four major projects are expected to boost up the future prospect of PIE. The projects are mostly supplying to Europe and USA.

Figure 14: PIE expected growth 15% in year 2017

Figure 15: PIE New Facility in Seberang Jaya

PIE CNC precision tooling division will start operation in new facility. This will bring down the outsourcing source which can bring up the net profit margin. As in below chart, the net margin of PIE is lowering throughout the years. PIE is seriously starting to prepare its CAPEX to build new facility to bring down the overall overhead cost which is beneficial for company future net margin.

Figure 16: PIE Net Profit Margin from 2007 to 2016

Figure 17: P.I.E Latest 10 Quarter Results

According to the latest quarter result, the net profit margin is 12.20% (Highest in few years). This might due to the high foreign exchange gain. As USD/MYR is maintained at 4.40, PIE is expected to maintain its net profit margin.


Stock Price Estimation

Table 2: Estimated Stock Price PIE Year 2017

As USD/MYR is maintained around 4.40 since earlier this year, even much higher than last year, net foreign exchange gain should be able to maintain in Q1 2017. If remaining 2017 USD/MYR can be maintained, P.I.E foreign exchange gain should be stable. 

P.I.E was facing flat year in 2016 due to lower demand from the E&E customers. As this year E&E export is picking up momentum this year, P.I.E should be able to return to its peak in its E&E export business with the insight of its mother company, Pan Global breaking new high in revenue.

Management also gives signal that old customers are starting to order from them and they also build up new customer base in 2016. Year 2017 should be year of harvest to return to its peak.

With the new facility starting in Q2 2017, the net profit margin should be able to breakthrough its recent low profit margin. From the Table 2, we also know that a slight improve in net profit margin, will actually improve P.I.E stock valuation significantly.

Conclusions

As Pan Global is breaking new high in revenue starting end of last year, PIE is also coming back from the lower revenue in early year 2016. Q1 is normally the lowest season for Pan Global, but it gave very good result in its latest announce monthly revenue. This will definitely beneficial to PIE. Sharp Corporation by Foxconn obviously will give more orders to Pan Global, and therefore to PIE.

As USD currency is going high now, PIE export business will be in advantage for its foreign exchange gain too. Year 2017 will be good year for PIE.

The risk is that if ringgit is strengthening against USD, PIE might face loss in foreign exchange. According to its annual report in 2015, ringgit strengthening of 10% may bring down profit of around RM 2 to 3 million.

1. 第一篇日记 （如何开始投资马来西亚股票）

大家好！先来个自我介绍，我是俊义，来自怡保，目前在吉隆坡工作。开始这个投资日记的目的，只是想记录自己的投资旅程，也想分享自己的想法给每个想要投资的朋友，同时开始学习做股票详细的研究报告。

首先，跟大家分享为什么我会选择投资股票，原因其实很简单，想要赚钱。股票投资的门槛还算蛮低的，不像产业投资，需要一笔比较大的资金，出租的话，还需要管理。在这一方面，股票投资就显得容易多了，资金不需要多，买进卖出也容易多了，当然要在股票市场赚钱也不简单，需要一定的投资知识和生意眼光。

要开始投资，非常简单，就如以下的步骤：

1. 你一定要18岁或以上。

2. 去任何一间Investment Bank (Maybank, CIMB etc) 开CDS Account。

3. 接着，你就可以开股票投资户口。

4. 通常投资银行会选一名remisier或者你也可以选择你想要的remisier，来服务你。

5. 你就可以开始转账进投资户口，开始你的投资之旅了。

这个时候，你可能就会面对一个问题，“我应该要买哪一只股票呢？”

马来西亚的上市公司多达900多间，做不同领域的生意。

我的建议是你可以从以下的网站找到马股的资料以及学习投资

1. Bursa Malaysia (http://www.bursamalaysia.com/market/)

• 马来西亚交易所
• 每一间上市公司的通告，都可以在这里找到，包括年报、季度报告、股东动向

2. 经济报纸 / 网站

• The Busy Weekly
• The Edge
• Focus Malaysia
• i3 Investor
• malaysiastock.biz
• Sin Chew/Nanyang 经济报

3. Blogspot

• 马来西亚有很多投资大师都有自己的网站，分享他们对个股的看法
• 我常看的blogspots：Harry Teo 魔法师、Ah Boon、Icon8888 etc

4. 投资书籍

• 冷眼前辈的投资书籍
• 基本面和技术操作的书籍 

从这些地方，你就可以开始你的投资之旅了！我会建议以RM2000++ 来开始你的股票投资之旅，因为如果少过RM2000，Brokerage Fee 就已经不值得了，你开股票户口时，你就可以得到这些水钱的资讯了。

祝大家投资成功，一起往财务自由前进！