‘Hup Seng’s well positioned in local cream cracker segment, but market saturated’

KUCHING: Analysts observe that Hup Seng Industries Bhd (Hup Seng) is well positioned in the local cream cracker segment, but the market for the product is saturated and competitive.

“We like Hup Seng for its dominant position in the local cream cracker segment (via Hup Seng Cream Crackers or Biskut

Cap Ping Pong),” AmInvestment Bank Bhd (AmInvestment Bank) said.

“However, the market for the product is saturated and competitive with low entry barriers.”

According to AmInvestment Bank, the limited pricing power results in its inability to fully pass on the ever rising costs, resulting in margin squeeze.

The research firm noted that while the export market offers room for growth, it is even more competitive as it is crowded with low-cost producers from all over the region.

“Looking forward, Hup Seng plans to strengthen its product quality, expand its product portfolio, costs management and broaden its distributor network. A new cracker line is slated to be operational by financial year 2020 (FY20).

“It is also trying out new recipes to expand its product range which should help to improve the utilisation rate of its baking lines.”

AmInvestment Bank highlighted that Hup Seng also plans to boost the company’s brand image by increasing its shelf space presence in Kuala Lumpur and Johor, especially in supermarkets in new shopping malls and convenience shops in residential areas.