18 February 2014 Stock1= Pick Chaw Sook Ting OKA Corporation Tel : +6(03)9207 7604 Email :
[email protected] BUY Major Shareholders (%) Stock Information Company Description Target MYR1.70 Ong Koon Ann 48.9% Market cap (MYRm) 74.3 OKA is involved in the manufacturing of precast concrete products in Malaysia. Previous - Quah Seok Keng 3.4% Share Capital (m) 60.9 Ong Choo Ian 2.5% OSK 188 Ticker OKA Price MYR1.22 Industry Construction Riding On Buoyant Construction Sector We are initiating coverage on OKA with a BUY recommendation and MYR1.70 FV, pegged to FY15F 10x P/E, still below its 10-year average P/E of 15.6x. We like the company for its: i) prudent management, ii) strong presence in Peninsular Malaysia, and iii) solid earnings visibility, given its ability to ride on the infrastructure developments in Malaysia that have long gestation periods. Being one of the dominant sewage pipe makers in Malaysia, we believe that OKA could potentially benefit from the West Coast Expressway (WCE) project. Earnings growth is expected to remain strong over the next two years, underpinned by more orders and better margins. We expect a CAGR of 25.5% from FY13-15F. OKA is still trading below its NTA/share of MYR1.72 as at end-Sept 2013. Ipoh-based producer of precast concrete products. OKA is involved in the manufacture of precast concrete products in Malaysia, mainly catering to the infrastructure, sewerage, construction and highway industries. Headquartered in Ipoh, Perak, the company has six factories in Peninsular Malaysia, with two plants in Batu Gajah in Perak, and one plant each in Sungai Petani, Nilai, Senai, Johor and Kuantan in Pahang.