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OCB’s Big Business Shift: Could This Be the Next Breakout Stock?
While OCB reports its performance under four business segments—Consumer Foods, Bedding Products, Building Materials, and Property Development—the majority of its revenue and profits come from the Consumer Foods segment.
Over the past five years, the company has undergone significant business restructuring. In 2022, OCB introduced Property Development as a new segment, while in 2024, it discontinued its Building Materials business. This strategic shift has allowed the company to focus on higher-margin businesses, positioning it for long-term growth. However, the transition has also presented short-term financial challenges.
• Revenue has rebounded strongly after a dip in 2021, largely driven by the strong performance of the Consumer Foods segment (refer to the leftmost chart).
• The Property Development segment is still in its early stages, but it has started contributing revenue and represents a potential long-term growth driver.
• The discontinuation of the Building Materials segment removed a lower-margin business and is expected to improve operational efficiency. In the short term, however, this exit resulted in a financial loss in 2024 due to restructuring costs.
After experiencing significant losses in 2019 and 2021, OCB returned to profitability in 2023. However, in 2024, net profit declined, primarily due to the disposal of a subsidiary and higher tax expenses. Despite this, the company remains in a much stronger financial position than in previous years, with improved cash reserves and profitability trends.
Currently, OCB is classified in the Turnaround quadrant on the Fundamental Mapper (refer to the rightmost chart), indicating that its business fundamentals have improved but are not yet fully recognized by the market.
Despite its financial recovery, OCB’s stock price has remained relatively stagnant over the past three years, suggesting that the market has yet to reflect the company’s better prospects.
If the stock price remains unchanged while financial performance continues to improve, OCB will eventually move into the Goldmine quadrant, where both fundamentals and valuation will align favourably for investors.