Dear Friends & Fellow Investors,

 

This evening lesson is “FIBERISATION MUST INCLUDE OPCOM FOR HSBB (High Speed Broad Band) & LAST MILE FTTH (Fiber To The Home).

The recent rumour of Broadnet starting a New Fiber Network for Last Mile FTTH brought shock wave to Opcom and the subsequent Sell Down by Ignoramous shareholders of Opcom in a knee jerk panic.

After the dust has been settled we See A Very Bright Future for OPCOM as the Dominant Optic Provider in Malaysia notwithstanding the challenge posed from other new entrants to FIBERISATION in Malaysia.

Why is Calvin so bullish?.

These are my findings:

1) BOTH TELEKOM & TENAGA FROM ITS INCEPTION BOUGHT OPTIC FIBERS FROM OPCOM.

TNB bought Rm2 millions to Rm3 millions FIBER for its own Data Storage. Since TNB is dealing with ELECTRICITY which is a Conductor for Copper It Has To Use Optic Fibers to prevent fires, short circuit & other dangers. Fiber being glass is a non conductor of Electricity. So Fiber only play a supporting role to TNB own internal needs of data  & communications

TELEKOM on the other hand has a very wide reach of HSBB & FTTH. Some years back TM ordered a huge Rm359 Millions Fiber Optic goods from OPCOM for its Peninsular HSBB. In Latest Budget Speech a Rm1 Billion Ringgit has been budgeted for HSBB for EAST MALAYSIA. And also Govt is stepping up Last Mile FTTH to every nook & corner; kampung & city; mountain or valley; in Kl metropolis or small Islands of all parts of Malaysia. This HSBB Total Penetration will lift Malaysia into THE DIGITAL AGE.

 

2) AND WITH THE MERGING OF TM & TNB THE CHALLENGE FROM BROADNET IS NOW STALLED

Malaysia is too small (only 30 million people) to have another dominant player in the HSBB & FTTH industry. It will only cannibalise the market share of Telekom. So TM has teamed up with TNB to forstall any challenge.

 

3) IS THIS GOOD NEWS PRIVY TO SOME?

No wonder there was a sudden spike in Both Volume and price of Opcom recently

 

See

17/01/2018	0.40	0.385 – 0.40	0.395	0.00 (0.00%)	308,700
16/01/2018	0.40	0.39 – 0.405	0.395	-0.015 (3.66%)	628,900
15/01/2018	0.45	0.41 – 0.45	0.41	-0.04 (8.89%)	1,458,600
12/01/2018	0.43	0.43 – 0.455	0.45	+0.01 (2.27%)	201,000
11/01/2018	0.46	0.43 – 0.475	0.44	-0.03 (6.38%)	618,900
10/01/2018	0.495	0.46 – 0.50	0.47	-0.02 (4.08%)	817,200
09/01/2018	0.48	0.48 – 0.53	0.49	+0.04 (8.89%)	3,759,300
08/01/2018	0.39	0.385 – 0.45	0.45	+0.075 (20.00%)	3,722,000
05/01/2018	0.375	0.37 – 0.39	0.375	+0.005 (1.35%)	2,197,900
04/01/2018	0.375	0.37 – 0.375	0.37	+0.005 (1.37%)	100,100
03/01/2018	0.37	0.36 – 0.375	0.365	0.00 (0.00%)	683,000
02/01/2018	0.37	0.365 – 0.375	0.365	0.00 (0.00%)	128,600
29/12/2017	0.36	0.355 – 0.365	0.365	-0.005 (1.35%)	195,900
28/12/2017	0.38	0.36 – 0.38	0.37	-0.005 (1.33%)	740,200
27/12/2017	0.38	0.37 – 0.38	0.375	-0.005 (1.32%)	308,000

As you can see from the low of 37 sen on January 5th 2018 Opcom jumped to a high of 53 sen for a gain of 43% in 3 days!

And th 3 day volume was 9.6 million shares of OPCOM. After T3 and T4 which prices retraced back below 40 sen most shares were TAKEN UP BY INSIDERS?

SO WILL THERE BE ANOTHER HUGE VOLUME ORDER COMING FOR OPCOM?

Now people thought OPCOM being Oppostion BN might import fibers from China.

This is not possible if BN Govt wants to bring the cost down.

With the ROARING SUCCESS OF ALIBABA In China & World wide there is now a Huge Demand for Optic Fibers in China. Unlike surplus steel in which China is dumping worldwide there is actually a huge shortage for fibers in China

See

OPTICAL FIBER SHORTAGE WORLD-WIDE

The optical fiber shortage topic is not new for those who are already in this business but it will be strange to those who do not know these facts.

Facts states that, only one country in the world (CHINA) is consuming 56% of fiber from the whole world fiber production capacity and followed by United States consuming 12.7% and then Japan 8.2%. The rest of the world gets only 23.1% of optical fiber shares. In this situation, fiber manufacturing companies are very happy as they are selling the optical fiber at a higher price. Fiber companies are selling small shipments to cover maximum customers at the increased price so that their business to continue with huge profits.

The optical fiber demand for single mode fibers is expected to grow in coming years and the main reason for this fiber shortage is the FTTH network projects which had increase the fiber consumption by 46% of the whole world total optical cable consumption. FTTH will continue to replace DSL and other lower speed services.

Due to this huge shortage of fibers, the fiber preform manufacturing companies are also in huge demand too and these companies are not making any new contracts.

Looking at this big fiber demand, the most of the companies had started working aggressively in building new plants to raise the growing demand of optical fiber preform and optical fiber drawing tower capacities. Optical Fiber preform industry had reached 11,017 tons in 2015. It is now growing around 21.6% and expected to reach 21,000 tons in 2020.

The growth in data traffic on smartphones, tablets and other mobile devices creates demand for fiber, not just in big cities but across the country. The demand for Internet from emerging countries, growing industrialization, growing telecom industry. These factors, along with the upcoming infrastructure projects in energy, transport, networks, institutional sites, and residential projects are expected to drive the fiber optic market. Further good news to this is that now more and more schools and educational institutions facilities in some countries are going to modify the education system to e-classrooms and these changes are possible if fiber-to-the-home (FTTH) projects are initiated now to build the fiber network.

China presently busy with its 4G & 5G project implementations of “Broadband China”, “Internet+” and “Full Fiber-optic Network” and suddenly China announces to stop all his projects then the fiber surplus situation will arise and people will get mad as to how to utilize the huge quantities of surplus fibers. The china will continue to lead the world’s increase in FTTH subscribers over the next five years. The Fiber-To-The-Home project in China is expecting to reach all houses in major cities and towns within the next couple of years and to complete this project in whole China in five years.

The big question today is: For how long this fiber shortage is going to continue? The real answer to this question is not known to anyone today; it only depend on China.  KANWARJITSINGH AHLUWALIAOperational & Technical Director – FBR Cables

SO WITH HUGE SHORTAGE OF OPTIC FIBERS IN CHINA THERE WON’T BE ANY EXPORTS FOR MALAYSIA. AND OPTIC STANDS TO REAL A HUGE WINDFALL BONANZA

WHY MUST THERE BE DEMAND IF TNB ALREADY GOT FIBER IN ITS GRID (POWER)?

This answer is this:

TNB has only FIBER FROM ITS STATION TO STATION. Think of the Human Organs of the Heart, Liver & Kidney, Brain, Lungs & Stomach. Blood Veins connects them. So Is the Connecting of Fiber from one TNB Station to another.

Now TNB has no last mile Fiber to homes. It only provides power cable for electricity. Just like Blood Veins are needed to bring blood to our hands & fingers, leg, feet & toes.   So Lots of Optic Fibers will be needed to connect from TNB Station to the home & every nook & corner of Malaysia. So another Rm12 Billions are needed for Total HSBB & FTTH.

And that’s why LOTS OF FIBERS WILL BE NEEDED FROM OPCOM

Best Regards

Calvin Tan Research,Singapore