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MAIN COMPANY: HUP SENG INDUSTRIES BERHAD

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MAIN COMPANY: HUP SENG INDUSTRIES BERHAD

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Company Overview

Established: 1958, Johor, Malaysia

Industry: Food manufacturing (biscuits)

Core Products: Cream crackers, assorted biscuits

Export Reach: Products sold in 20+ countries across Asia, Middle East & Africa

Stock Exchange: Listed on Bursa Malaysia under Consumer Products

Brand Legacy: Over 60 years of biscuit-making heritage and consumer trust

Innovation: Combines traditional recipes with modern manufacturing technology

Sustainability Focus:

Invests in eco-friendly packaging and energy-efficient operations

Supports local sourcing to reduce carbon footprint

Recognition:

Multiple local and regional food industry awards for quality and taste

Recognized as a top Malaysian heritage food brand

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Financial Performance Overview – Hup Seng

Revenue Recovery:

After a dip in 2021, revenue rebounded strongly in 2023 with a 12.3% growth.

Profitability:

Net profit surged by 72.9%, rising from RM26.1 million (2022) to RM45.1 million (2023).

Shareholder Value:

Both Return on Equity (ROE) and Earnings Per Share (EPS) improved in 2023, indicating enhanced value for shareholders.

Dividend Policy:

Maintained a strong dividend payout, averaging over 95% over the past five years, reflecting a committed return policy.

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Company Overview

Founded: 1962, Selangor, Malaysia

Industry: Food production – specializing in snacks and biscuits

Key Brands: Hwa Tai and Luxury

Main Products: Cookies, cream biscuits, crackers

Market Reach:

Active in both domestic and export markets

Strong focus on Asia-Pacific region

Brand Presence:

"Luxury" is one of Malaysia’s well-known household biscuit brands

Long-standing reputation for consistent taste and affordability

Innovation:

Introduced modern baking technologies to enhance product quality

Regularly develops new flavors to meet changing consumer preferences

Halal Certified:

Products certified Halal, suitable for Muslim consumers locally and internationally

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Financial Performance Overview – Hwa Tai

Revenue Trend:

Revenue ranged between RM60 million and RM80 million, showing only modest fluctuations without a clear upward trend.

In 2023, revenue reached RM80.8 million, the highest in five years, marking a 5.9% increase compared to 2022.

Profitability:

The company has struggled to generate consistent profits over the past five years.

Earnings Per Share (EPS) have remained consistently negative, reflecting ongoing losses for shareholders and limited returns on investment.

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REASON FOR SELECTING HWA TAI AS THE COMPETITOR

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REASON FOR SELECTING HWA TAI AS THE COMPETITOR

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Comparable business model

Same sector of the industry

Hwa Tai is a lesser rival

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Hup Seng consistently demonstrates superior financial health across all metrics with strong liquidity, impressive profitability, low debt levels, and extraordinary interest coverage.

Hwai Tai shows serious financial distress with negative profitability, escalating debt, and inability to cover interest expenses, making it a high-risk investment to avoid.

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To handle this, HSIB can find more suppliers to work with, use pricing strategies that let them pass the extra costs to customers, and invest in making production more efficient to lower costs.

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HSIB depends on key raw materials like flour and palm oil, whose prices can change frequently due to global supply chain issues. If HSIB doesn't increase their product prices when these raw material costs rise, they’ll make less money.

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In 2021, most of HSIB 's revenue, specifically 96%, came from selling biscuits. Relying heavily on this single product could be dangerous. If the market becomes saturated or if consumer preferences shift, it might affect sales negatively

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HSIB can reduce this risk by expanding their range of products, selling in new areas within the country, exploring international markets, and creating new products using their successful existing brands.

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EFFECTS OF INFLATION AND CONSUMER SPENDING HABITS

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EFFECTS OF INFLATION AND CONSUMER SPENDING HABITS

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EFFECTS OF INFLATION AND CONSUMER SPENDING HABITS

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When prices rise and people have less money to spend, they might cut down on buying items they don't really need, like biscuits.

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To deal with this potential drop in sales, HSIB can present more appealing offers, keep a close watch on day-to-day costs to maintain reasonable prices, and implement loyalty programs to encourage customers to keep buying from them. These strategies can help HSIB maintain its market position despite economic challenges. By effectively addressing these risks, HSIB can protect its product lineup and improve its financial outcomes.

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Though HWA THAI had growth in revenue the profitability is quite low. This is impacted by continuing challenges related to cost and margins, which will affect the framework for financial sustainability.

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The company should prioritize cost optimization and potential better product innovation . The company can invest in operational efficiencies through either technology or process improvements.

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Hwa Thai faces a high-level competition in the Malaysian food and beverage industry and its needs to distinguish itself.

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In this competitive field, Hwa Thai needs to promote stronger branding through proper marketing and quality products , create new partnerships with distributors and consider loyalty programs to connect with consumers and encourage long lasting relationships.

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Supply chain risk is associated with global distribution. Example , COVID 19 can expose Hwa Thai to defined risks such as delays in the delivery, changes in costs, availability and other market factors.

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To prevent future supply chain disruptions, Hwa Tai should strategically diversify its supplier base for raw materials, optimize inventory levels by balancing holding costs and stockout risks, and develop proactive contingency plans. By identifying potential logistical challenges early and taking preventive action, the company can ensure timely deliveries. Strengthening these areas will help Hwa Tai improve operational efficiency, sustain profitability, and support long-term growth.

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Strategic Positioning and Market Leadership

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Strategic Positioning and Market Leadership

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Real-World Application of Financial Concepts

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Real-World Application of Financial Concepts

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FUTURE FINANCIAL PERFORMANCE OF HUP SENG INDUSTRIES BERHAD

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FUTURE FINANCIAL PERFORMANCE OF HUP SENG INDUSTRIES BERHAD

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Liquidity

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Profitability

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Leverage

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Strong Financial Foundation

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Market Leadership Potential

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Strategic Expansion

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Declining Margins

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Inflation and Cost Pressures

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Competition

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