Strong Revenue Growth

Oriental Food Industries Holdings Berhad (OFI) has done very well for the last 5 quarters with strong YoY growth on revenue and profit. Quarterly revenue hit record high of RM121.105m in the first quarter of FYE2025. First quarter profit surged 126% on the back of very impressive 26% revenue growth. Revenue has consistently grown >20% for the last 4 quarters.

Based on the trajectory of the recent quarterly results, it would appear that OFI will likely deliver all time high revenue and profit again in FYE2025. Annualized net profit will exceed RM50m. Compared to its current market cap of RM432m (at RM1.80), OFI is trading at less than 9x PER which is very low for a high growth consumer stock.

Background (Top brands are Super Ring, Jacker, Rota and ZESS)

​OFI manufactures, markets, and sells snack food and confectionery products. The company offers snack food products, wafers, potato snacks, and bakery products under Super Ring, Jacker, Rota, Oriental, Fudo, Delio, ZESS, and Funtos brand names.

Strong balance sheet with net cash

Financially, OFI has strong balance sheet and pays dividends consistently. Net cash position has doubled to RM59.8 in the first quarter of FYE2025 from RM29.27 in FYE2023. It's net cash position of RM59.8m stands at 13.8% of market cap. 

The company always maintains healthy cash position which allows consistent dividend payouts of 30-40%. Based on the historical dividend payout trend, OFI should be able to maintain at least 2 sen dividend per quarter. At current price of RM1.80, the stock offers an attractive yield of 4.5%.

What is OFI worth?

With strong revenue and profit growth, OFI is a good stock to consider for mid to long term. If OFI is valued at 20x of latest quarter profit, the stock would be worth RM4.15. This is conservative compared to its peers like Hup Seng, Apollo and Power Root which are trading at higher PER but lacking growth.  

OFI is also a potential target for acquisition by private equity funds due to its cheap valuation. Having a market-leading position with own brands like Super Ring, Jacker and JESS can lead to a premium valuation being offered for OFI. Back in 2018, CVC Capital acquired Munchy's for RM1.1 billion, at a high premium compared to Munchy's sales of about RM220m (source). For perspective, OFI's sales was RM432m last year.

OFI new product - Super Ring Cheese Crackers

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