[Performance Unboxing] Oriental Food Industries Q4 FY2024

OFI (7107), which I shared with you earlier, announced their Q4 FY2024 results yesterday. In addition to a new high performance, the company also paid a dividend of RM0.020. So why did the company's stock price not rise but fall?

Before we discuss this in depth, let's take a look at OFI's performance.

In the quarter, OFI's revenue was RM109.7 million, up 30.77% from RM83.9 million in the same period last year, mainly due to increased revenue in overseas markets.

Although OFI does not have a detailed distribution of products, my personal guess is that sales of ZESS and potato chips products will increase; judging from what the company shared at AGM last year, I believe ZESS's share of the company's revenue will gradually increase in the future.

At the same time as revenue increased, the company's gross profit margin (“GPM”) also increased from 15.12% to 20.65%; profit before tax (“PBT”) surged from RM4.3 million to around RM18.2 million.

Compared to Q3, OFI's revenue declined by 5.30% from quarter to quarter, but Q4 is generally the company's weakest performance (due to the New Year's relationship), so the quarterly reference value will be relatively small.

Interestingly, while OFI's revenue declined, the company's PBT rose 17.70% quarterly ‼️ But this was mainly due to the company's total foreign exchange profit of around RM1.7 million during the quarter and a lack of bad debt provision expenses.

In any case, OFI's annual revenue in FY2024 reached a new high of RM431.7 million, an increase of 19.92% compared to the RM360.0 million of FY2023, while PBT rose from RM24.7 million to RM55.6 million.

In FY2024, OFI's net operating cash income (“NOCF”) is RM41.0 million, while capital expenses (“CAPEX”) are around RM7.0 million. Taken together, the company's net free cash flow is RM34.0 million. Currently, the cash on hand is RM58.1 million, and the debt is less than RM3.0 million, which is quite stable.

To reward shareholders, OFI also announced a dividend of RM0.020, with an exclusion date of June 14, 2024.

Objectively speaking, OFI's performance in Q4 FY2023 is very good, but why is the stock price still falling?

The following content is just personal speculation and review of market trends. I would like to suggest that you focus on fundamentals:

According to my personal understanding, there are already some rumors about OFI's performance in the market, which means that the market currently has certain expectations for this company.

Second, although OFI's performance is good (again, Q4 is generally weaker), it is more “in line with expectations”, so it is not ruled out that some selling pressure will surface, forming a phenomenon of arbitrage.

Finally, OFI actually has very few tradable shares, only 280.0 million shares, and the total number of shares traded on average in recent days is only about 0.31%. This may also be due to poor liquidity. Fewer investors are concerned about their rising performance. Coupled with the existence of arbitrage factors, it has actually declined.

So, what do you think of OFI?

Photo Credit: Company Facebook

Disclaimer:

The moderator is not a licensed stock analyst, so we don't provide you with any trading advice. If necessary, you can ask a licensed stock analyst or licensed stock broker.

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