KUALA LUMPUR: Hup Seng Industries Bhd
’s third-quarter results for the period ended Sept 30, 2024, sent shares up about 7% in early trade Thursday, driven by better-than-expected numbers.
The food and beverage group rose eight sen, or 7.27%, to RM1.18 at 9:48 am. Year-to-date, it has surged a remarkable 54%.
Hup Seng’s net profit rose 32.6% to RM17.3mil in 3Q24 compared with RM13mil posted a year ago while earnings per share climbed to 2.16 sen from 1.63 sen previously.
Revenue for the quarter grew by 10.9%, reaching RM104.4mil compared to RM94.2mil.
In the first nine months (9M24), the group posted higher net profit and revenue of RM40.3mil and RM278.2mil, respectively.
Hup Seng has declared a second interim dividend of 2 sen per share and a special dividend of 1 sen per share for the financial quarter ending Dec 31, 2024 (FY24).
BIMB Securities Research said Hup Seng’s 9MFY24 net profit of RM40.3 million, marking a significant 28.2% year-on-year (YoY) increase, surpassed both the house and consensus estimates.
It said the growth was largely driven by lower input costs for key raw materials and a higher sales volume. Moreover, the commissioning of Hup Seng’s new oven has notably enhanced production capacity, contributing to improved performance and efficiency.
BIMB has upgraded Hup Seng to “buy” with higher target price of RM1.36 from RM1.10 previously.
“In light of Hup Seng’s enhanced production capabilities and strong market positioning, we have revised our earnings estimates upward for FY24F, FY25F, and FY26F by 26.9%, 28.4%, and 30.1%, respectively with anticipation of increase in sales volume, supported by the new production line and growing market penetration,” it said.
BIMB expects Hup Seng to maintain sales momentum, especially with the upcoming festive season driving consumer demand. However, it noted that the rising cost of raw materials, particularly palm oil, could impact margins.
Meanwhile, MIDF Research said Hup Seng’s latest quarterly results met its full-year FY24 forecast and were slightly above consensus, at 76% and 86% of full-year expectations, respectively.
Given that 9MFY24 is within our estimates, we are making no changes to our earnings forecast for FY24-26F,” it said, adding that it maintained its “neutral” call on Hup Seng with an unchanged target price of RM1.04.
