$OCK / 0172 (OCK GROUP BERHAD) continues to win contracts, but this time makes an announcement about it.

For those following the company, you would know that they have been regularly winning contracts from various parties-- especially since the push for 5G and more telco infrastructure. It's no surprise, since they are one of the most prominent players in this field.

Typically, they do not announce individual contract wins and one would need to refer to the QR to see the outstanding orderbook on hand at the time of reporting. However, this time around they have (finally) made an announcement of their wins after getting consent from the awarding party to disclose information about the contract. It's not a large contract, so let's just quickly go through it.

1. OCK secures a contract for the rental of "eco-friendly ICT hardware that meet green requirements" on a lease-to-use basis for school computer labs phase 3 in Sarawak.
- Not sure what eco friendly ICT hardware means, and I'm also not aware of any green requirements. It was mentioned that they are leasing laptops.
- Lease to use basis, so it's basically CAPEX upfront and then collect recurring income over the contract period.

2. Contract period is 65 months-- 4 months for installation and T&C, 60 months for leasing, and 1 month for return-- with a total value of RM 48.7mil. Simplifying it into a 5 year contract, it is approximately ~RM 9.5mil a year in revenue. I'm not sure what kind of margins a business like this can have. Unfortunately, peer in this segment, $SNS / 0259 (SNS NETWORK TECHNOLOGY BERHAD) , doesn't disclose their margins from the DaaS segment. Checking other leasing business, for example HP, shows pretty good profit.

3. However, it is small compared to their total revenue, thus I personally think it's good incremental earnings (money is money after all) but it won't substantially move the profit too much. With that being said, if they can continue to secure more and more of this kind of "ICT Leasing" contracts, small additions could add up to substantial amounts over time. And nothing is stopping them from leasing more than just laptops and charging stations-- for example, routers, meshes, and other IT infrastructure, could all be good recurring income to the group. A foot in the door with track record with the MoE is always a good first step.

Let's just hope that students don't vandalise the items (or that there are clauses in place for this)

Extra thoughts:
It's good that they could make an announcement on this-- and it could raise awareness that OCK is no longer just a contractor but transitioning into asset ownership and rental model. It could be widely known information. Or maybe not enough people know about it. We shall see.