The share price of Malaysian-based Oriental Food Industries (OFI) has recently reached its low of slightly below RM1.40. Will it continue to decline?
Let’s perform a quick visual comparison between OFI and other comparable food / consumer products companies listed on Bursa Malaysia:
The above diagram shows the market cap of OFI and its comparable food companies. Most of these companies generally move in tandem with each other.
Let’s compare the market cap of OFI against the total market cap of these comparable food companies (excluding OFI):
The above regression analysis shows statistical significance that the market cap of OFI will depend on the total market of the other food companies.
In addition, the following diagram shows that OFI’s current market cap has fallen below the 95-percent confidence interval, thereby increasing the likelihood of a potential rebound from its current low.
Based on the regression parameters, the theoretical market cap for OFI is shown below. The current market cap of OFI is MYR331.2 m (or MYR1.38 per share) which is relatively lower than the predicted market cap of MYR525.0 (or RM2.18 per share), with a confidence interval of MYR379.0 m (or MYR1.58 per share) and MYR671.0 m (or MYR2.79 per share). Will we see a potential rebound in OFI’s share price to at least RM1.58 per share?
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