Author: sosfinance | Publish date: Tue, 14 Jun 2016, 07:05 PM
ADDING OCK-WA INTO THE PORTFOLIO by KENANGA
This is the report by Kenanga dated 5 May 2016, when the price of OCK-WA was 18sen. Kenanga has a TP (fair value) of the warrant at 44 sen and the mother share at 95 sen. OCK was closed at 79.5 sen that day.
ANALYSTS' TARGET PRICE FOR ONE YEAR ONLY (by 1H2017)
Below are the summary of analysts' research report on the fair value or target price of OCK, as shown in OCK Group website.
OCK Report date Ref. Price Target Price
RHB 15/3/16 71 sen 102 sen
RHB 08/6/16 82 sen 100 sen
Kenanga 26/5/16 81 sen 95 sen
Inter Pac 26/5/16 81 sen 93 sen
Malacca 31/5/16 80.5 sen 100 sen
OCK-WA
Kenanga 5/5/16 18 sen 44 sen
TAKE ANALYSTS' REPORT WITH A PINCH OF SALT
While credit should be given to those analysts who could uncover great gem from the Bursa range of stocks, it is also advisable to use it as a reference, with a pinch of salt.
While investors may have different views or opinion about the biz, partly it could be due to different reasons or assumptions. For example, if investors looking at the this stock for a period of 3-5 years, hence, one must add in the
(a) NPV of the remaining 2,000 towers to be built in Myanmar
(b) NPV of the forthcoming acquisition of brownfield towers in Indochina (still awaiting more info to estimate the value, but it can contribute immediately since it is a brownfield project.
(c) Assumption of warrants are converted into shares
Besides the different assumptions above, mainly due to different time horizon, hence, there are more value to an investor if their horizon is much longer than the analyst (typically one year)
Of course, there are also many other different assumptions need to be refined, such as currency rate, price of steel, or any other major factors that could effect the value of the company.
SO, WHAT IS THE VALUE (IF) WE LOOK AT 3-5 YEARS HORIZON
Theorectically speaking, we should add in (a), (b) and (c) above. Since, most analysts gave the 920 towers a NPV value of about 20 sen, we can also use 20 sen as reference value for 1000 towers.
(a) additional value for 2,000 towers = 40 sen (reference to analysts)
(c) additional value for brownfield towers = 10 sen (estimates)
(c) if warrant converted = 11 sen (assume RM175m of warrant conversion used for Myanmar)
Total value of OCK at 2020 is about = 100 (analyst TP) + 61 sen = 161 sen.
Doubling your price in 4.5 years from 80 sen to 161 sen in 2020.
What about OCK-warrant?
A simple calculation is, 161 sen less exercise price 71 sen = 90 sen.
If you buy today, say at 24 sen, in 4.5 years time, you will get about 66 sen capital gain. When I first discussed about the warrant, it was at 16 sen (in Dec 2015).
Few milestones have materialised as follows:
Dec 2015 Rights issue completed + Myanmar Telenor agreement signed
May 2016 Quarterly result and Annual Report is out
June 2016 Private Placement about RM64 million announced and investment in brownfield in Indochina also mentioned
So, fundamentally, the price before Dec 15 and today should reflect the milestones above.
IT'S JUST A THEORY, A STOCK THEORY.
DISCLAIMER
This is just an idea, not a recommendation to buy, sell or hold.
This is the report by Kenanga dated 5 May 2016, when the price of OCK-WA was 18sen. Kenanga has a TP (fair value) of the warrant at 44 sen and the mother share at 95 sen. OCK was closed at 79.5 sen that day.
ANALYSTS' TARGET PRICE FOR ONE YEAR ONLY (by 1H2017)
Below are the summary of analysts' research report on the fair value or target price of OCK, as shown in OCK Group website.
OCK Report date Ref. Price Target Price
RHB 15/3/16 71 sen 102 sen
RHB 08/6/16 82 sen 100 sen
Kenanga 26/5/16 81 sen 95 sen
Inter Pac 26/5/16 81 sen 93 sen
Malacca 31/5/16 80.5 sen 100 sen
OCK-WA
Kenanga 5/5/16 18 sen 44 sen
TAKE ANALYSTS' REPORT WITH A PINCH OF SALT
While credit should be given to those analysts who could uncover great gem from the Bursa range of stocks, it is also advisable to use it as a reference, with a pinch of salt.
While investors may have different views or opinion about the biz, partly it could be due to different reasons or assumptions. For example, if investors looking at the this stock for a period of 3-5 years, hence, one must add in the
(a) NPV of the remaining 2,000 towers to be built in Myanmar
(b) NPV of the forthcoming acquisition of brownfield towers in Indochina (still awaiting more info to estimate the value, but it can contribute immediately since it is a brownfield project.
(c) Assumption of warrants are converted into shares
Besides the different assumptions above, mainly due to different time horizon, hence, there are more value to an investor if their horizon is much longer than the analyst (typically one year)
Of course, there are also many other different assumptions need to be refined, such as currency rate, price of steel, or any other major factors that could effect the value of the company.
SO, WHAT IS THE VALUE (IF) WE LOOK AT 3-5 YEARS HORIZON
Theorectically speaking, we should add in (a), (b) and (c) above. Since, most analysts gave the 920 towers a NPV value of about 20 sen, we can also use 20 sen as reference value for 1000 towers.
(a) additional value for 2,000 towers = 40 sen (reference to analysts)
(c) additional value for brownfield towers = 10 sen (estimates)
(c) if warrant converted = 11 sen (assume RM175m of warrant conversion used for Myanmar)
Total value of OCK at 2020 is about = 100 (analyst TP) + 61 sen = 161 sen.
Doubling your price in 4.5 years from 80 sen to 161 sen in 2020.
What about OCK-warrant?
A simple calculation is, 161 sen less exercise price 71 sen = 90 sen.
If you buy today, say at 24 sen, in 4.5 years time, you will get about 66 sen capital gain. When I first discussed about the warrant, it was at 16 sen (in Dec 2015).
Few milestones have materialised as follows:
Dec 2015 Rights issue completed + Myanmar Telenor agreement signed
May 2016 Quarterly result and Annual Report is out
June 2016 Private Placement about RM64 million announced and investment in brownfield in Indochina also mentioned
So, fundamentally, the price before Dec 15 and today should reflect the milestones above.
IT'S JUST A THEORY, A STOCK THEORY.
DISCLAIMER
This is just an idea, not a recommendation to buy, sell or hold.
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