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Theme: Cash Is King: OBM Drilchem PT

Writer's picture: Tian Khean NgTian Khean Ng

Updated: Dec 20, 2024

Jakarta Stock Exchange

Ticker Symbol: IDX OBMD

Currency: Indonesian Rupiah

Data as of 13 December 2024

Theme fundamentals:

•             Cash/Total Capital: 49.5%

•             Current Ratio: 7.15%

•             Total Debt/Total Capital: 5.4%

•             Return on Assets:11.6%

•             Levered Free Cash Flow margin: 25.4%

Brief Insight

Many “Cash Is King” stocks are undervalued and show a downward trend despite their very good cash flow and position.  Most investors are Momentum players and not Mean Reversion players.  This is because it is easier to predict Momentum than Mean reversion.  Therefore, “Cash Is King” stocks are often overlooked or not keyed in as criteria for screening. However, value players stand to gain the most by being in the opposite direction of the market when in time to come, sheer fundamentals of cash and balance sheet of such stocks eventually cause their share prices to rise. And  OBM Drilchem fits the bill . In such cases, Support is a call to buy in, and not a call to cut loss. Resistance is a call to take profit or re-allocate portfolio position.

With a P/E of 7.39 and a 5-year negative Beta of -2.63, OBM Drilchem is one of those buy-and-hold-stocks if you believe in the potential of its primary business: Supplying high value drilling fluids with a gross profit margin of 77.5% to the oil and gas companies of Indonesia.

OBM Drilchem has a Fair Value of 208.43 (Investing.com model) versus its 230 data points median of 208.83. It also has a Fair Value upside of 30.9% (Investing.com model)


1-20 steps ahead forecast trend

Support, Resistance and Risk

Support at 5% Quantile: 200.53

Resistance at 95% Quantile: 217.25

Independence Test: (Durbin-Watson Test): 1.14

A DWT value of 1.14 is below the critical value of 2, indicating the presence of mild-to-moderate positive autocorrelation in the residuals. Positive autocorrelation implies that successive residuals are correlated, with errors showing a pattern rather than being random (i.e. not noise) This indicates what may be called negative momentum as weak holders liquidate the stock to adjust their portfolios.



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