Still on Pullback Mode

With the recovery still remain at infant stage, we reckon that outlook remains challenging as global economic recovery remains at an uneven patch with temporary shutdown in manufacturing activities and tepid demand. While the North America segment remains upbeat, the softer demand from other regions of the world continues to bog down the overall performance.

We attended the post quarter results analyst briefing and came away feeling re-assured on OCK Group Bhd (OCK) recovery moving into FY21f. FY20 was largely affected by the slowdown of sites deployment due to the Covid-19 pandemic with domestic mechanical & engineering works were halted for several months. Moving into the FY21f, we note that the re-implementation of Movement Control Order (MCO 2.0) will be less severe given the relaxation of business operations, whilst the deployment of Covid-19 vaccination may provide some relieve, particularly towards end-2021.

While the oil & gas business segment will continue to anchor the overall earnings growth, Serba Dinamik is gradually shifting towards other business segments, particularly the ICT business segment. For the time being, the ICT segment orderbook of approximately RM2.2bn (close to 12.0% of total orderbook of RM18.7bn) will sustain earnings visibility over the foreseeable future.