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.

Moving forward, AME is equipped with an outstanding construction orderbook of RM173.0m to sustain earnings visibility for the next 2 years. For FY23, new property sales recorded at RM479.2m, which has largely surpassed FY22 sales of RM168.4m. Unbilled property sales at c. RM351.3m (up from RM273.0m in 3QFY23) will sustain the property development segment earnings for 2 years.

We remain optimistic about REXIT’s current negotiations with prospective new clients. Once a successful agreement is reached, the client is anticipated to come on board during 4Q23, initially contributing through motor e-Cover service, and subsequently expanding into non-motor transactions in 1Q24. We like the introduction of the new revenue stream from the client through subscription-based services, which will generate a steady and recurring income.