TO make up for weaker export sales, Hup Seng Industries (HSI) has embarked on online distribution, upgrading its mobile sales system (MSS), improving its product quality, expanding its product portfolio and resuming its promotional efforts.
AmInvestment Bank said in a note that HSI is bracing for a slowdown in its exports this year amidst the growing consensus of a steep downturn in the global economy due to the Covid-19 pandemic.
“Export sales to countries such as Thailand, Myanmar, Saudi Arabia, Indonesia, China and Singapore make up about 30% of HSI’s total turnover,” the research firm said.
Meanwhile, HSI has strengthened its online distribution via virtual market places such as Lazada; and upgrading its MSS, the marketing application used by the company’s sales team.
“The upgrading will simplify the handling of new orders. It also enhances mobility, enabling the sales team to extract product information as well as taking orders from customers on-the-go.
“This, in turn, enables real-time production planning including sourcing of raw materials and labour which will improve operational efficiency,” it said.
HSI also intends to improve its product quality and expand its product portfolio with the key focus on switching to healthier ingredients in line with the rising health awareness amongst the population.
Finally, HSI plans to resume its promotional efforts such as product displays and free sampling of its signature products in shopping malls and education centres to gain market share and strengthen its brand locally, after the Movement Control Order (MCO) is lifted.
Meanwhile, the company hopes to buffer the slowdown in its export sales via better sales incentives to its overseas distributors.
AmInvestment Bank noted that HSI has a dominant position in the local cream cracker segment via Hup Seng Cream Crackers/Biskut Cap Ping Pong.
While the export market offers room for growth, it is very competitive as it is crowded with low-cost producers from all over the region.
“We maintain our forecasts, hold recommendation and fair value of 88 sen for HSI based on 16 times financial year 2021 earnings per share forecast.
“We value the company at three-times multiple discounts to its historical average of 19 times to reflect its weakened growth prospects,” it added. — April 16, 2020, Bernama
