OLD CHANG KEE | SGX:OCK Faster Growth – coming up the MRT track

Summary:

OCK’s vertically integrated business model together with the strategic location of its kiosks in high footfall traffic nodes such as MRT stations and with the MRT network undergoing significant expansion provides it with an excellent platform for growing revenues from the current $104mil to $150mil.

With a healthy balance sheet OCK is expected to be debt free in FY27F. Its relatively strong Nett Cash position is reflected in ex-cash PE of 3.4x FY27F. OCK currently trades at a relatively attractive 1.7x book backed by robust ROAE above 20% without any premium accorded to its high FCF generation.

OCK’s 8.6x FY27F PE is anchored by strong EPS growth, with its PEG ratio at 0.52x.

Our Total Shareholder Return (TSR) framework estimates Intrinsic Value/Target Price of $1.61. Initiate coverage on OCK with BUY recommendation with potential 40% upside (or implied $200mil market cap).