OCB (5533): OCB BHD - VERY UNDERVALUED CONSUMER STOCK THAT COULD DOUBLE!
Nowadays, it is very hard to find undervalued consumer stocks. Consumer stocks are the darlings of the large funds globally. You can see how consumer stocks like BJFood, Focus Point, Nestle, F&N, Johotin and many others are valued - nothing less than 15x PE.
The name of this undervalued consumer gem is OCB Berhad.
What does OCB do? They have 3 divisions - consumer food, bedding and bathroom fittings (OCB calls it building materials). For consumer food, OCB owns the famous IBUMIE brand and also makes seasonings. For the bedding division, OCB manufactures the famous King Koil mattress brand. For the bathroom fittings division, OCB distributes many famous brands such as Johnson Suisse, Hansgrohe, Armitage Shanks and many others.
2 days ago, OCB reported its strongest quarterly profit in their history. The very
strong profit was contributed by its consumer foods and bedding divisions.Their bathroom fittings division made a tiny loss but the consumer foods and bedding divisions were so strong that it not only offset the losses by the bathroom fittings division but also helped OCB to report record quarterly profits.
Below are screenshots of their January 2020 - September 2020 and January 2020 - June 2020 performance by division. The difference between the two are the profits made in 3Q20.
In total, OCB reported a quarterly net profit of RM4.5 million or 4.41sen EPS. By division, consumer foods made a profit of RM3.3 million in 3Q20 while the bedding division made a profit of RM2.1 million
From their website, OCB says that they have made a push to sell their products online via platforms such as Lazada and Taobao. I believe this has enabled them to cut out the middleman and earn much higher profits and also revenue. Below are screenshots from their website:
At 4.41sen EPS and share price of RM0.54 now, this is a very undervalued consumer gem. The last time OCB reported decent profits in 2014, OCB traded at a high of RM1.03. For the whole of 2014, OCB only made a net profit of RM7.1 million and its share price went to RM1.03. For the last 3 months alone, OCB already made RM4.5 million net profit and is now trading at only RM0.54! It is a matter of time before this consumer stock gem gets discovered and share price moves higher.
