Orderbook update. With the incorporation of the newly secured contract, orderbook replenishment for financial year-to-date (YTD) now stands at RM266.7m, which slightly exceeded our expectations of RM200.0m for FY23f. We note that YTD wins already surpassed FY22 wins at c. RM155.6m. The successful completion of the previous Cambodia project will be a testament for ECONBHD to cement their position in Cambodia over the long run.

The poultry segment saw higher revenue (+4.1% YoY) arising from higher ASP and sales volume of DOC and eggs in Malaysia, as well as favourable sales volume of dressed chickens in Philippines. Nevertheless, EBITDA declined 83.0% YoY for the segment due to margin compression stemming from elevated feed costs coupled with lower ASP of DOC in Indonesia.

As at 1QFY23, OCK owns and manages over 5,300 telco sites across Vietnam, Myanmar, and Malaysia that will provide recurring income stream over the long term. We remain sanguine over the group’s on-going expansion plans in Vietnam and Myanmar to subsequently register more than 6,000 telco sites in FY23f. The group aims to beef up their tower portfolio by additional 1,000 towers in Vietnam as well as 200 towers each across both Myanmar and Malaysia in 2023.

Meanwhile, we continue to like the recyclable consumer and food ware division with potential to expand overseas. We expect a better margin in this division as the group is in a transition period of moving from lower margin items to bigger items such as storage box, furniture range, cabinets etc.

1QFY23 core net profit fell 33.4% YoY to RM14.1m, dragged down by lower contribution from Vietnam due to higher interest expenses arising from the rising interest rates.

1QFY23 net profit decreased 5.2% YoY to RM7.0m, dragged down by weaker contribution from the medical segment as demand for Endoscopy Video Cables that used in Covid-19 treatment tumbled.

The reported numbers came in line; making up to 23.8% of our forecasted net profit of RM484.1m and 26.4% of consensus forecast of RM436.0m. We reckon that the earnings growth in the subsequent quarters will be supported by (i) progressive billings of unbilled property sales (ii) steady income from capital financing and (iii) strategic investment in RHB Bank Bhd (10.24% equity stake).

YoY, the increase in core net profit stemmed from (i) increase in number of refractive and cataract surgeries across all ambulatory care centres (ACC) and satellite clinics, (ii) higher contribution from the newly set up satellite clinic, and (iii) ongoing promotions for eye specialist services through online platforms.