With over 65% jump in share price over the past year, can Hup Seng continue its uptrend?
Hup Seng Industries Bhd saw some revival in its share price movement to close at RM1.16 on Aug 30. Hup Seng was trading at a year low of 68 sen last October but rose to a high of RM1.33 on July 5. It has been an impressive for the counter, which rose some 65.7% in the past year.
The confectionary maker reported a net profit of RM9 million, up 4% year-on-year in 2QFY24, which lifted its 1HFY24 performance to RM23 million, rising 25% YoY. The rise in net profit was primarily driven by lower input costs, meanwhile revenue saw a slight YoY increase of 3.5%, supported by a modest uptick in sales volume.
This is mainly contributed by export sales which grew by 8%, driven by its market in Myanmar, Indonesia and Singapore, while domestic sales registered a marginal 2% increase.
According to consensus expectations, Hup Seng is forecasted to post net earnings of RM47.2 million for FY Dec 2024 and RM52.2 million for FY Dec 2025. This implies prospective PERs of 19.3x this year and 17.5x next year, respectively.
Its revenue declined by 14% quarter-on-quarter, from RM93.6 million to RM80.2 million while net profit fell by 35%. This was mainly due to seasonal factors and a slowdown in sales in both the domestic market and the Asian region, which decreased by 15% and 11% respectively.
The sales number were negatively impacted by its significant reliance on domestic sales, coupled with conservative consumer spending impact from prior sale price adjustments.
Based on consensus dividend per share estimates of 4.1 sen in FY24 and 4.6 sen in FY25, the stock currently offers dividend yields of 3.6% and 4%, respectively. Analysts continue to be wary of cautious consumer spending.
Nevertheless, Hup Seng’s strategy of enhancing its brand presence and strengthening both domestic and export markets is expected to support its competitiveness and potentially mitigate some of these challenges.
With the share price havig appreciated substantially over the past 12 months, it will be challenging for it to go up further given that a slowdown in sales growth is anticipated.Activate to view larger image,
The confectionary maker reported a net profit of RM9 million, up 4% year-on-year in 2QFY24, which lifted its 1HFY24 performance to RM23 million, rising 25% YoY. The rise in net profit was primarily driven by lower input costs, meanwhile revenue saw a slight YoY increase of 3.5%, supported by a modest uptick in sales volume.
This is mainly contributed by export sales which grew by 8%, driven by its market in Myanmar, Indonesia and Singapore, while domestic sales registered a marginal 2% increase.
According to consensus expectations, Hup Seng is forecasted to post net earnings of RM47.2 million for FY Dec 2024 and RM52.2 million for FY Dec 2025. This implies prospective PERs of 19.3x this year and 17.5x next year, respectively.
Its revenue declined by 14% quarter-on-quarter, from RM93.6 million to RM80.2 million while net profit fell by 35%. This was mainly due to seasonal factors and a slowdown in sales in both the domestic market and the Asian region, which decreased by 15% and 11% respectively.
The sales number were negatively impacted by its significant reliance on domestic sales, coupled with conservative consumer spending impact from prior sale price adjustments.
Based on consensus dividend per share estimates of 4.1 sen in FY24 and 4.6 sen in FY25, the stock currently offers dividend yields of 3.6% and 4%, respectively. Analysts continue to be wary of cautious consumer spending.
Nevertheless, Hup Seng’s strategy of enhancing its brand presence and strengthening both domestic and export markets is expected to support its competitiveness and potentially mitigate some of these challenges.
With the share price havig appreciated substantially over the past 12 months, it will be challenging for it to go up further given that a slowdown in sales growth is anticipated.Activate to view larger image,
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