OCK Group Berhad: A Dividend-Paying Undervaluation Play in a Growing Telecommunications Sector?

The Malaysian telecommunications sector is at a crossroads, balancing the demands of 5G infrastructure expansion with the pressures of market saturation and rising operational costs. Amid this backdrop, OCK Group Berhad (KLSE: OCK) emerges as a compelling case study for investors seeking a blend of value and growth. With a Price-to-Book (P/B) ratio of 0.63 as of August 2025—well below the Telecommunications Services industry median of 1.97—the company appears undervalued relative to its peers [1]. This metric, combined with a consistent dividend yield of 2.12% and a forward P/E ratio of 12.42, positions OCK as a potential dual-play opportunity for those willing to look beyond short-term volatility [2].

Valuation Metrics: A Bargain or a Warning?

OCK’s financials suggest a stock trading at a discount. Its P/B ratio of 0.63 reflects a book value per share of RM0.651, while the share price languishes at RM0.41 [1]. This gap between intrinsic value and market price is further amplified by the company’s 10-year low P/B of 0.57, indicating a prolonged period of undervaluation. For value investors, this could signal an opportunity to capitalize on market inefficiencies. Meanwhile, the dividend yield of 2.12%—supported by a payout ratio of 49.9%—suggests a sustainable income stream, even as earnings per share (EPS) growth has moderated to 5.9% annually [2].

However, the low P/B ratio also raises questions. A 12-month book value growth rate of -6.70% highlights declining asset values, which could stem from overinvestment in capital-intensive projects like 5G towers or underperformance in core services [1]. Investors must weigh whether this discount reflects prudent risk management or a lack of confidence in the company’s long-term profitability.

Growth Catalysts: 5G, Data Centers, and Green Energy

OCK’s strategic pivot toward high-growth sectors offers a counterbalance to its valuation challenges. The company is a key player in Malaysia’s second 5G network rollout, with partnerships like its agreement with U Mobile in July 2024 underscoring its relevance in the next-generation infrastructure race [3]. This aligns with global trends: the telecom sector is projected to grow at a 6.15% CAGR through 2034, driven by 5G adoption and AI-driven operational efficiencies [4].

Beyond connectivity, OCK is expanding into data centers and renewable energy. A RM103 million order book for data center-related work signals its ambition to tap into the surging demand for cloud infrastructure [5]. Simultaneously, the company is leveraging Malaysia’s Corporate Renewable Energy Supply Scheme (CRESS) to bolster its solar power portfolio, a move that not only diversifies revenue streams but also aligns with global ESG investing trends [5]. These initiatives could unlock new margins, particularly as the company’s EV/FCF ratio of 45.12 suggests investors are paying a premium for future cash flow potential [2].

Competitive Positioning: Market Share and Structural Challenges

OCK holds a 33% market share in Malaysia’s telecom towers sector, managing 6,000 sites for U Mobile and 5,300 for Maxis [3]. This dominance is critical in a market projected to grow at a modest 0.25% CAGR through 2030, where consolidation is becoming an economic imperative [6]. Yet, competition from EDOTCO Group and OPCOM Holdings remains fierce, with all players racing to adopt new technologies to reduce infrastructure costs [6].

The company’s 9.9% historical revenue growth rate contrasts with its 5.9% earnings growth, hinting at margin pressures. A net profit margin decline from 5.1% to 4.4% further underscores the challenge of translating top-line growth into profitability [2]. For growth investors, this raises concerns about OCK’s ability to sustain its expansion without compromising margins.

A Dual-Edged Sword: Balancing Value and Growth

OCK Group Berhad’s appeal lies in its duality: a low valuation that suggests value and a strategic pivot toward high-growth sectors that hints at growth potential. However, the company’s financial metrics—particularly its declining book value and moderate earnings growth—demand caution. The key question for investors is whether OCK’s current discount reflects a temporary market oversight or a structural issue in its business model.

Conclusion

OCK Group Berhad presents a nuanced case for investors. Its undervalued metrics and dividend yield make it an attractive option for income-focused value investors, while its 5G, data center, and renewable energy initiatives offer growth potential. However, the company’s ability to navigate margin pressures and maintain its market share in a consolidating industry will determine whether it becomes a success story or a cautionary tale. For those willing to take a long-term view, OCK could represent a rare intersection of value and growth in a sector poised for transformation.

Source:
[1] OCK Group Bhd (XKLS:0172) PB Ratio [https://www.gurufocus.com/term/pb-ratio/XKLS:0172]
[2] OCK Group Berhad Statistics - KLSE [https://stockanalysis.com/quote/klse/OCK/statistics/]
[3] Malaysia Telecom Towers Market Size & Share Analysis [https://www.mordorintelligence.com/industry-reports/malaysia-telecom-towers-market]
[4] 7 Trends That Will Define Telecommunications in 2025 [https://gomomentum.com/7-trends-that-will-define-telecommunications-in-2025/]
[5] OCK Group 2025 Outlook Supported By 2nd 5G Network ... [https://www.businesstoday.com.my/2024/11/29/ock-group-2025-outlook-supported-by-2nd-5g-network-infrastructure-data-centre-growth-and-national-clean-energy-drive/]
[6] The Malaysian Telecom Sector: Consolidation Becomes an Economic Imperative [https://www.alixpartners.com/insights/102kdmi/the-malaysian-telecom-sector-consolidation-becomes-an-economic-imperative/]