on the back of an expected pick-up in moble-related capex in 2021.After raising FY20-22F core earnings by 3% to 7%, the research house increased its target price on the stock to 68 sen from 65 sen previously.
According to the research house the assignment of 5G spectrum and projects related to the National Fiberisation and Connectivity Plan should benefit OCK.
"Domestic contracting orderbook stood at a healthy MYR90m as at end-June. Capacity upgrades and increased backhaul fiberisation works from enterprises’ digitalisation drive should keep the group busy," it said.
RHB said recurring revenues were set to top 70% in 2Q20 due to the recent site maintenance contract in Indonesia and new tower-builds.
"With the group looking at inorganic expansion and new buildto-suit site orders, recurring revenue contribution should exceed 80% in FY21, offering good longer-term earnings visibility/certainty for investors," it added.
The research house expects OCK's proposed 1-for-10 renounceable rights issue to be priced at a significant discount of over 30% to entice shareholders, given the current market environment.
It estimates FY21 earnings per share accretion of about 7% arising from interest savings on debt and warrants proceeds. Net gearing would drop to 0.8x from 1.1x post-exercise.