BACKGROUND OF COMPANY (HUP SENG INDUSTRIES BERHAD)

HupSeng Industries Berhad is an Industrial company, along with its

subsidiaries, engaged in the manufacture and sale of biscuits and other
related products principally in Malaysia. The company was established in
the year 1958. The registered headquarters of the company is located in
BatuPahat, Johor. The company is publicly traded on the Kuala Lumpur
stock exchange under the ticker symbol HUPSENG. HupSeng in one of
Malaysias leading biscuits manufactures. The companys products include
cream crackers, Marie biscuits, sandwich, cookies, and assorted biscuits
under the brand name Kerk, Ping Pong, In-Comix, Ong San Yong and Wang
wang. The company is ISO 9001:2000 certified fo quality management
system. It markets its products in Asia, Africa, Oceania, Europe and North
America. HupSeng operates as a parent company of HupSengHoon Yong
Brothers Sdn. Bhd., which is engaged in sales and distribution of biscuits,
confectionery and other food stuff, HupSeng Perusahaan MakananSdn.
Bhd., which is involved in the manufacturing of all its products from a
factory located in TongkangPecah, BatuPahat, Johor.
BUSINESS SUMMARY
The principal activity of the company is investment holding. The principal
activities of the subsidiaries are the manufacture and sale of biscuits and
confectionery products.
DESCRIPTION AND HISTORY
The Group is one of the leading players in the biscuits market in West
Malaysia. The Group, which is was founded by four brothers, was awarded
the ISO 9002 certification in 1995. Its subsidiary, HupSeng Perusahaan
Makanan (M) Sdn. Bhd. (HSPM), manufactures all its products from a
factory located in TongkangPecah, Btu Pahat, Johor. All the main raw
materials (flour, sugar, refined bleached deodorised palm (RBD) olein,
RBD palm oil, biscuit tins, biscuits wrappers and cartons)are sourced
locally. The factory has six production lines with combined annual output
of 30,622 m/t and production capacity of 53,022 m/t in year 2001. The
1

Groups products are distributed locally by HupSengHoon Yong Brothers

SdnBhd (HSHY), covering the Klang Valley, Kota Bahru, Kuantan, Ipoh,
Butterworth, and AlorSetar. Other distributors are located in West Malaysia
(Kuala Lumpur) and East Malaysia (Tawau, Sandakan, Kuching, Bintulu,
Miri and Sibu). The Group also has a network of 69 agents in 40 countries
to market its products. For the financial year ended on December 12,
2001, approximately 27% of the Groups products were exported. The
sweetened and unsweetened biscuits manufactured are marketed under
the trademarks Kerk and Cap Ping Pong.
The award:
2008 BRC Global Standard
2012 ISO 0001:2008
2012 HACCP Warranty Accredition
2012 ISO 22000:2005 Food Safety Management System Halal Certification MS
1500:2009/1 145-08/2004
1994-2015 Gold Medal Award, Monde Selection
2005 MITI Industry Excellence Award 2004
2003 The 3rd Prize of Malaysias Top 100 Brands 2002 (Food Products)
1991 Gold Medal Award, Taipei International Gourment Appraisal Organisation
This has educated consumers on food safety and hygiene and at the same time
fostered their confidence in HupSengs products.

1. PROFITABILITY RATIO
i. Return on Capital Employed (ROCE)
The return on capital employed ratio (ROCE) shows whether
the people who invested money in the business are getting an
adequate return on their investment.

Return on capital employed (ROCE) =

x 100

Net profit

Capital employed
2013
2014
50081724
x 100
51724827
80000000+60000000
100
2
60000000+60000000
= 71.55%
2
= 86.21%

The return on capital employed (ROCE) for HupSeng Industries

Berhad in 2013 was 71.55%, while in 2014 an increase to
86.21%, an increase of 14.66%. It shows in 2014 was better
than in 2013.
ii.

Gross Profit
The gross profit percentages shows the amount of gross profit
for every 100 of sales revenue.

Gross profit

x 100
Sales

2013
94578061 x 100
251407055
= 37.62%

2014
96954965 x 100
262217996
= 36.97%
3

Gross profit percentage ratio for HupSeng Industries Berhad in

2013 was 37.62%, while in 2014 namely 36.97%. Apply drop
of 0.65% between the two years. It shows in 2013 better than
in 2014.

iii.

Net Profit
The net profit percentage shows the amount of net profit for
every 100 of sales revenue.

Net profit

x 100
Sales

2013
50081724 x 100
251407055
= 19.92%

2014
51724827 x 100
262217996
= 19.73%

The percentage ratio of net profit for HupSeng Industries

Berhadin 2013 was 19.92% and decrease of 0.19% to 19.73%
in 2014. It shows in 2013 better than 2014.
2. LIQUIDITY RATIO
i. Current Ratio
The current ratio compares assets which will become liquid
within approximately 12 month with liabilities which will be
due for payment in the same period and indicates whether
there are sufficient short-term assets to meet the short-term
liabilities.
Current ratio = Current assets

2013
140 114 822
47 087 947
= 2.96

Current liabilities
2014

157 796 493

63 178 231
= 2.50
4

Liquidity ratio on current ratio for HupSeng Industries Berhad

in 2013 was 2.96, while for the year 2014 was 2.50 decrease
of 0.46. It shows in 2013 better than 2014.
ii.

Acid Test Ratio

The acid test ratio shows whether the business has sufficient
liquid resources to meet its current liabilities.

Acid test ratio = Current assets inventory

Current liabilities

2013
140114822 20817932
47087947
= 2.53

2014
157796493 20778877
63178231
= 2.17

The liquidity ratio acid test for HupSeng Industries Berhadin

2013 was 2.53 compared to 2.17 in 2014, decrease about 0.
36. It shows in 2013 better than 2014.

3. EFFICIENCY RATIO
i.
Inventory Turnover
The inventory turnover ratios measures how efficient a
business is at maintaining an appropriate level of inventory.
Cost of sales
Average inventory
5

2013
156828994
20817932
20586831
2
= 156828994
207023815
= 7.58 times

2014
165263031
20778877

20817932
2
= 165263031
207984045
= 7.9 times

In 2013 the ratio of inventory turnover for HupSeng Industries

Berhad is 7.58 times while decrease about 0.32 times to 7.9
times in 2014. It shows in 2013 better than 2014.
ii.

Account Receivable
The accounts receivable/sales ratio measures the length of
time a debtor takes to pay their debt.

Accounts receivable/sales
3.2

exp:

45,000/144,000 = 1 :

This relationship is often translated into the length of time a

debtor takes to pay: (exp)
365 x 1

= 114 days
3.2

2013
35872644
251407055
= 1 : 7.0
365 x 1
7
= 52 days

2014
35517480
262217996
= 1 : 7.3
365 x 1
7.3
= 50 days

HupSeng Industries Berhad in 2013 the debtor must duration

of 52 days to pay their debts, compared to 2014 by 50 days.
Difference occurred during 2 days. It shows in 2014 better
than 2013.

iii.

Account Payable
The account payable/purchase ratio measures the length of
time we take to pay our creditors.

Accounts payable/purchase
3.07

exp:

30,000/92,000 = 1 :

This also is often translated into the length of time we take to

pay our creditors. This turns out to be: (exp)

2013
42215855
156828994
= 1 : 3.71
365 x 1
3.71
= 98 days

365

x 1

= 119 days

2014
46574959
165263031
= 1 : 3.55
365 x 1
3.55
= 103 days

The time taken to pay off creditors in 2013 is 98 days

compared to 103 days in 2014 for HupSeng Industries Berhad,
its difference about of 5 days. This is shows in 2013 better
than 2014.

4. SHAREHOLDER RATIOS
i.
Earnings Per Share Ratio (EPS)
The earnings per share ratio (EPS) gives the shareholder a
chance to compare one years earnings with another in terms
that are easily understood.

Earnings per share = Net profit after interest and taxes and
preference
dividends
Number of ordinary shares issued

2013
36744846
60 000 000
= 0.61

2014
38147021
7
60 000 000
= 0.64

The earnings per share ratio for HupSeng Industries Berhadin

2013 was 0.61 while increase to 0.64 in 2014 difference about
0.03. It shows in 2014 better than 2013.

ii.

Dividend Cover Ratio

The dividend cover ratio gives the shareholder some idea as to
the proportion that the ordinary dividends bear to the amount
available to distribution to ordinary shareholders.
Dividend cover = Net profit after tax and preference dividends
Ordinary dividends paid and proposed

2013

2014

36744846
39 600 000
= 0.93

38147021
33 600 009
= 1.14

In 2013 the ratio for HupSeng Industries Berhadwas 0.93 while

increase about 0.21 to 1.14 on 2014. It show in 2014 better
than 2013.

CONCLUSION
Overall rating HupSeng Industries Berhad show that the
company has an disadvantage in terms of gross profit, net profit,
current ratio, acid test ratio, inventory turnover, and accounts
payable. For example, the current ratio and acid test ratio in
liquidity ratio are decrease.
The advantages of company HupSeng Industries Berhad is in
terms of return on capital employed ratio (ROCE), accounts
receivable, earnings per share and dividend cover. For an example,
the earnings per share ratio (EPS) and dividend cover ratio in
shareholder ratios are increase.
Almost from all ratios in 2013 are better than 2014, but the
total net profit in 2014 are RM 38 147 021 better than 2013 is RM 36
744 846. While the percentages are decrease from 2013 to 2014 are
19.92% to 19.73%.