大提琴家的股市投资笔记 / The Cellist's Share Investment Note: HUPSENG latest annual report

Saturday, 20 April 2019

HUPSENG latest annual report

There are some companies that I no more holding the company shares,
but this doesn't mean that I do not care about those companies anymore.

So today let's have a look at one of these companies:

If we look at the 5 years record,
the revenue did have some improvements:

Sadly the profit were on the opposite trend............
EPS also kept dropping:

Anyway the ROE still looked beautiful~
HOWEVER......
How much gain it actually brought to the shareholders??
It depends........

For the past 3 years,
dividend still maintained at 6.0 sen per share,
the payout ratio is more than 100%.

The business segment of HUPSENG actually can be divided into 3 categories:

I will not discuss the details here,
since the Biscuits Range already contributed 95% of the total revenue,
the other two categories were not worthy to mention here.

As for why the profit dropped while revenue improved?

The answer is here:

The increment in the price of major raw materials while the selling price of the products didn't fluctuate much last year.

For the revenue,
domestic sales is around 72% while export is around 28%:

The domestic sales increased by 4% while the export sales decreased by 0.8% due to strengthening of Malaysian Ringgit against US dollar.

The capacity utilization of the ovens in Batu Pahat plant is about 87%,
and two baking lines were converted to natural gas as its source of fuel to save costs:

The company also bought a new cracker line which will start the installation work at May 2019,
and expected to be fully operational by 1st quarter 2020.

After 2 years of testing,
the 2 sets of auto stacking system are yet to achieve desired result,
so the management is looking for new packaging concept......

For the export:

The top5 countries of export sales are Thailand, Saudi Arabia, Singapore, Myanmar and Indonesia,
which altogether contributed 58% of total export revenue.

As for export sales to China,
the sales volume of biscuits grew by 47%:

However,
export sales to China only around 2.6% of total revenue,
and the China market is intense with competition,
so the company will not be over optimistic about it.

There is a change in Saudi Arabia's economic strategy,
which prices of imported products are higher and will affect the export sales to there.

Lastly,
the future prospects by management:

The operating environment will still be tough for year 2019,
and the company will explore and expand new products with healthier ingredients to meet the market trend.

That's all for the latest annual report of HUPSENG,
if you want to read more by yourself,
feel free to go to download one from BURSA website.

Investment is about doing own thinking, making own decision.

Thanks for reading.

I don't provide any buying/selling suggestion above,
please make your own investment decision and be responsible with it.