TECHNICAL AND FUNDAMENTAL ANALYSIS

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HUPSENG (5024) - Technical & Fundamental Analysis

July 6, 2019

Fundamental Analysis

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- HUPSENG shares price enters a downward trend since Nov 2015.

- From technical analysis views, we should not hold HUPSENG counter for long-run investment.

- Only suitable for speculative investment in short term period.

- Due to EMA240 & EMA120  are above EMA20 & EMA 60, HUPSENG shares price is having a great selling pressure currently.

- RSI reflects Oversold level with dull status which might lead shares price to a lower level.

- Resistance R1: RM 0.950

- Support S1: RM 0.925

 

Fundamental Analysis

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a) Summary

- We notices that HUPSENG shares price is quite expensive based on current earning.

- Example, if you invests RM1 in HUPSENG counter, it take 17.50 years to cover your capital.

- Latest earning growth for Y2018 in negative value and average earning growth in past 4 years at 5.15% which reflected it is a mature business modal.

 

b) Market Prospect Ratios

- Based on dividend payout per shares, we able to conclude HUPSENG managements are very kind to the investor.

- The dividend payout ratio is 111.73% and 107.91% in Y2018 and Y2017 respectively.

- However, if you are dividend investor, we don't suggest you hold HUPSENG in long run due to the depreciation of shares price is more than dividend payout in the past 4 years.

- We should profit taking at a higher level and buy back at a lower level based on technical analysis.

 

c) Profitability Ratio

- Total revenue increases in the past three years (Y2017: RM285.7M ; Y2018: RM299.7M ; Y2017: RM307.4M)

- Due to the higher cost of sales, it leads profit margin and gross margin ratio reduce steadily.

- It reflects that HAPSENG doesn't have competitive advantage position in selling pricing control.

- Higher cost in raw material (Wheat flour, oil based material and cartons) further reduce the profit margin and gross margin in the past 4 years.

- Higher in ROC by 24% majorly contributed by lower value in total account receivable by -RM5.36M and cash & short term investment by -RM3.51M in Y2018.

 

d) Efficiency Ratio

- From the efficiency ratio table, it shows HUPSENG management able to sustain their business effectiveness in the current scale.

- They don't have difficulty in sales collections and able to sustain sales conversion from raw material at 1.6 months in the past 4 years.

- Higher value in account receivable turnover ratio contributed by lower value in account receivable by -RM5.36M on YoY basis.

 

e) Liquidity & Solvency Ratio

- HUPSENG don't hold any financing borrowing (Long Term or short term) in the past 4 years.

- It reflected that HUPSENG able to generate operating income to cover all necessary expenses.

- There is no significant red flag for HUPSENG to meet short term or long term obligations.

 

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