Business Breakdown: What Does Hup Seng Industries Do?
Hup Seng Industries Berhad (HSIB) is a well-known Malaysian company specializing in biscuits and beverages. The company operates through three key segments: biscuit manufacturing, beverage manufacturing, and trading. Its biscuit division focuses on producing and selling a variety of crackers and biscuits, while the beverage segment is involved in manufacturing and wholesaling coffee mixes and other food products. Meanwhile, the trading division handles the sales and distribution of biscuits, confectionery, and other food items.
HSIB’s products range from savory to sweet biscuits, marketed under popular brands like Cap Ping Pong and Hup Seng Cream Crackers. On the beverage side, its In-Comix brand is known for its coffee mixes. The company operates through its subsidiaries: Hup Seng Perusahaan Makanan (M) Sdn. Bhd., Hup Seng Hoon Yong Brothers Sdn. Bhd., and In-Comix Food Industries Sdn. Bhd.
Past Financial Performance & Dividend Analysis
Net profit margin (NPM) has been on downtrend we can see from FY2015, all the way to FY2022, then there were improvements to FY2023 & FY2024. Coming to FY2024, HSIB achieved record high revenue and net profit due to high sales volume and lower material costs for the year.
Q4FY2024 Results At A Glance
Revenue increased in Q3FY2023 to RM 117.12 mil due to domestic market increased 26% or RM19.2 million compared to previous corresponding period from all channels. Export market increased by 13% or RM2.8 million mainly from Indonesia, Thailand, Japan and Myanmar. As for PBT, Q4FY2024 has increased 24.69% compared to Q4FY2023 due to high sales achieved.
In terms of margin, GP margin in Q4FY2024 dropped by 1.9% compared to last year same quarter, while PBT & NP margin increased insignificantly compared to last year same quarter.
Revenue for the period above increased mainly due to increase in sales volume. Domestic sales registered an increase of 11% or RM30.6 million from all channels. Similarly export sales increased by 10% or about RM7.5 million mainly from Indonesia, Japan, Singapore, Myanmar and Mauritius. The commercial run of the new oven effective from third quarter contributed to an additional production capacity, which resulted in higher sales recorded.
As for the PBT increased for the same comparison period due to the contribution of lower input costs of certain major materials during Q1 to Q3. The increase in sales volume during the second half of the year also contributed to the improvement in profit before tax. Comparatively, GP / PBT / NP margin increased compared to the same period last year.
Let’s dive deeper into balance sheet of HSIB. Cash and bank balances of HSIB dropped to RM 83.11 mil as at 31/12/2024 from RM 90.51 mil as at 31/12/2023. One point worth noting is that total liabilities of HSIB stood at RM 87.27 mil the same closing date, in which the cash and bank balance can almost cover all the liabilities of the Group.
Future Prospects & Potential Risk
A quick look into HSIB’s management future prospects of the business operations:
- Maintain a cautious outlook given the highly competitive nature of the industry.
- Anticipates further challenges -> The rising cost of raw materials, especially palm oil, due to supply constraints in the near future and possible risks of higher tariffs.
- Streamlining the operations and enhancing brand awareness.
- Enhance performance in the coming year by leveraging operational efficiencies and cost-saving initiatives.
Stock Chart Movement & Consensus Estimate
Share price of HSIB has been bottomed and reversal formed, on uptrend since Oct 2022 until Dec 2024, currently the share price is still on high side, which already reflected HSIB’s financial performance growth.
Based on the consensus estimates from Shareinvestor.com, the mean target price for HSIB is RM 1.20, which is quite near to current price at RM 1.13 (closing price as at 12/2/2025 – 12.30pm).
Conclusion
Hup Seng Industries Bhd has been facing downtrends in terms of net profit margin due to higher main materials costs caused by external environment. What makes HSIB interesting is that the revenue is increasing although lower decreasing in net profit, when it came to lower main material cost, providing the revenue on uptrend, the net profit can turn around and provide better financial performance overall.
Although HSIB achieved record high on revenue and net profit, as current world trade conditions are changing rapidly due to tariffs imposed and various other factors, therefore we do still need to keep an eye on main material cost as those are main factors that may erode and heavily affect the net profit of the Group.