KUALA LUMPUR (April 20): Biscuit maker Hup Seng Industries Bhd said on Wednesday (April 20, 2022) it believes that 2022 will continue to be a year full of challenges and uncertainties as the global economy is at risk of renewed commodity shortages due to factors including the rapid spread of the Covid-19 outbreak and supply chain disruptions.

"The global economy is at risk of renewed commodity shortages due to the rapid spread of the Covid-19 variant Omicron, rising energy costs, supply chain disruptions, labour and climate change.

"The greatest challenge to the group will be the rising material costs and managing the costs will be a priority for the group over the longer term," Hup Seng said in its latest annual report, which was filed with Bursa Malaysia on Wednesday (April 20, 2022).

According to Hup Seng, which makes biscuits under the "Cap Ping Pong" and "Hup Seng Cream Crackers" brands, the financial year ending Dec 31, 2022 (FY22) is expected to be a challenging year for the group as operations are affected by external uncontrollable factors which could materially affect the company's performance and growth in unforeseen ways.

Hup Seng, which also makes the "3 in 1 Instant Coffeemix" beverage product, is mindful of the company's export business.

"The dilemma faced on the global shortage of containers, port congestion and soaring shipping rates by the shipping industry is expected to continue until 2022.

"In processing export orders, the group will need to be more cautious due to the limitation of the expiry date of the products, which directly affects the export business," Hup Seng said.

Hup Seng is however optimistic about the prospects of the Malaysian biscuits industry amid a Covid-19 vaccine-driven economic recovery.

"The group will continue to explore new markets to broaden its revenue and enhance the competitiveness of the products," Hup Seng said.

According to Hup Seng which makes its biscuits and beverage products in Batu Pahat and Senai, Johor respectively, the group has six sales networks across Peninsular Malaysia covering the Klang Valley, Kota Bahru, Kuantan, Ipoh, Butterworth and Alor Setar as well as seven distributors across Sabah and Sarawak.

The company said its main export markets are Myanmar, Thailand, Singapore, Indonesia and Saudi Arabia.

At Bursa's 12.30pm break on Wednesday (April 20, 2022), Hup Seng's share price rose 0.5 sen or 0.59% to 85 sen, which values the group at RM680 million.

Hup Seng has 800 million outstanding shares, according to its annual report.