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From Crumbs to Cash: How Hup Seng Is Quietly Winning the Game!
Hup Seng Industries Berhad is a well-established player in the biscuits, crackers, and coffee mixes market, with its products marketed under several brand names. Over the past six years, the company has undergone significant leadership transitions and operational modernization.
Between 2019 and 2024, revenue grew at a 5% CAGR, while PAT expanded at an 8.2% CAGR. This higher profit growth was not driven by margin expansion but rather better control over fixed costs - including Selling, General & Administrative (SG&A) expenses and Depreciation & Amortization. Over this period, fixed cost margins declined from 18% in 2019 to 15% in 2024, contributing to improved profitability.
As such ROE went from 26% in 2019 to 35 % in 2024. The impact of these improvements is evident in the Fundamental Mapper, where Hup Seng ranks as one of the better-performing businesses. However, its stock price has risen over the past year, and while it is currently below its past-year high, it still carries some investment risk.
The key question is whether the company can sustain its business improvements to justify a move into the Goldmine quadrant at its current valuation. Addressing variable costs and expanding margins could significantly enhance its positioning, making this a potential opportunity if executed effectively.
阿笔股票观察名单系列4-浅谈HUPSENG
公司近期发布的2024年度报告披露了多项亮点，显示其传统品牌正在朝高效能与环保并重的方向转型:
-demand for the Group’s Cream Cracker had exceeded the production capacity
-our new baking oven, fired by natural gas, started operation effective July 2024. The oven not only increase our production capacity but also improve energy efficiency, reduce operational costs and enhance the quality of our biscuits.
财务表现稳健，股息高于定存(约为银行定期利率的两倍）, 值得大家关注.