Turning the Tide: How Bursa Snack & Confectionery Companies Are Rewriting Their Future

Case Notes 39: Rethinking Returns: The Quiet Reinvention of Bursa Malaysia’s Snack & Confectionery Sector.

 

Malaysia’s snack and confectionery sector is undergoing a quiet but notable transformation. Characterised by steady and low-growth returns, this segment was traditionally seen as a defensive play. As such, the segment has often flown under the radar of mainstream investors. Yet, a closer look reveals that change is underway.

Several Bursa-listed players are rethinking their business models. This is in response to shifting consumer preferences, rising input costs, and growing opportunities in regional and export markets. What was once a slow-moving sector is starting to show signs of strategic reinvention. There are greater digital adoption, operational efficiency, sustainable practices, and bold capital allocation moves.

This article takes a closer look at four such companies that reflect this shift, each navigating its path to transformation:

• Fraser & Neave Holdings Bhd (F&N). A heritage brand that is building a new identity as an integrated, regional food and beverage powerhouse, with recent moves into halal packaged food, dairy farming, and the snack space via Cocoaland.

• Khee San Berhad. A once-distressed confectionery maker is now attempting a turnaround through financial restructuring and gradual operational recovery after years of losses and declining revenues.

• Oriental Food Industries Holdings Berhad (OFI). A homegrown success story expanding globally, leveraging digital marketing, export growth, and sustainability initiatives to strengthen its competitive position.

• Hup Seng Industries Berhad. A biscuit and coffee mix manufacturer quietly boosting its profitability through cost discipline and process modernization, delivering consistent improvements in return metrics.

Each of these companies offers a window into how Malaysia’s snack and confectionery players are evolving. They are not just trying to defend market share but to capture new value. When viewed alongside sector-wide data, these stories suggest that investors may want to give this overlooked corner of the market a second look.

Should you go and buy them? Well, read my Disclaimer!

Contents

• What the Sector Data Reveals

• ROE Down, Investments Up - Is F&N Building for a Breakout?

• Is Khee San Finally Turning the Corner?

• How OFI is Quietly Becoming a Global Powerhouse

• From Crumbs to Cash: How Hup Seng Is Quietly Winning the Game!

• Methodology

• A Sector in Motion

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What the Sector Data Reveals

As of March 2025, there are 11 companies that I would classify as serving the broader snack and confectionary sector. This ranged from giants such as Nestle Malaysia to much smaller companies such as SDS. Refer to Table 1.

Of these companies, 2 companies – KOPI and Wellspire did not have the financial information from 2016. As such the various trends and charts covered only 9 companies. 

Refer to the Methodology section for details on how I derived the various statistics used in this article.

Table 1: Snack and Confectionary Companies’ Sizes

This is not a growth sector in terms of investments. From 2015 to 2025, the median Total Equity grew at only 3.3 % CAGR while the median Total Assets grew at 0.6 % CAGR.

Chart 1: Sector Total Asset and Total Equity Trends

Notes:

• Q1 refers to the lower quartile.
• Q3 refers to the upper quartile.
• The 2025 values were based on Dec 2024 LTM values

We see modest growth from revenue and earnings. Over the past decade, the median revenue grew at 5.8 % CAGR, while the median PAT grew at 4.1 % CAGR. 

You can see from Chart 2 that while revenue grew quite steadily, the PAT faced some downtrend before turning around. You can understand the turnaround theme of this article.

Chart 2: Revenue and PAT Trends

You can see from Chart 3 that lower profit growth compared to the revenue growth can be attributed to declining gross profit margin. The positive sign was that the improvement in the Selling, General and Administration (SGA) margin ie declining trend, help to boost the operating profit margin. 

From 2016 to 2025, the median operating profit margin grew at 0.8 % CAGR, while those for the lower quartile (Q1) grew at 4.5 % CAGR. However, there was no growth for the large companies with the upper quartile (Q3) declining at 1.3 % annual compounded rate.

Chart 3: Gross Profit Margin and SGA Margin Trends

Given the growth in capital and earnings, there was not much growth in the returns. Over the past decade, the median ROE grew at 1.4 % CAGR, while the median ROA grew at 2.7 % CAGR.

But you can see from Chart 4 that the smaller companies did not experience any growth. The Q1 ROE declined at 1.6 % per annum compounded while the Q1 ROA declined at 1.7 % per annum both on compounded bases.

Chart 4: ROE and ROA Trends

The main positive picture for the sector was that there was improving financial strength.

As can be seen from the left part of Chart 5, there were uptrends in the Cash Flow from Operations for the median and quartiles. 

There were also declining Debt Equity ratios for the median and quartiles. However, the Debt Equity position got worse over the past few years for the upper quartile (Q3). But I think this value was very skewed by the negative equity of Khee San from 2020 onwards. If I excluded Khee San, there would be a reduced Debt Equity ratio for even the upper quartile. 

Chart 5: Cash Flow from Operations and Debt Equity Trends

Summary

The data paints a picture of a sector in quiet transition. While the snack and confectionery industry in Malaysia has not been a high-growth space in terms of capital investment or returns, signs of operational discipline and financial strengthening are emerging. Revenue and profit growth remain modest, and overall returns on equity and assets have been underwhelming - particularly for smaller players. Yet, behind the averages, there are encouraging trends: improving operating margins, better cost control, and stronger cash flows.

These indicators suggest that while the sector may not be flashy, it is becoming more resilient and efficient. The disparity in performance across quartiles also highlights how company-specific strategies - like OFI’s global push or Hup Seng’s cost discipline - can set firms apart even in a low-growth landscape. For investors, this signals that while the sector may not lift all boats, those positioned with the right strategies and execution could still deliver meaningful returns.

ROE Down, Investments Up - Is F&N Building for a Breakout?

Over the past six years, F&N has transformed from a traditional beverage and dairy company into a diversified and integrated food and beverage group. 

In 2022, it entered the snacks and confectionery segment via the acquisition of Cocoaland and expanded its Halal packaged food portfolio through the rebranding of Sri Nona. Around the same time, it ventured upstream into dairy farming with the acquisition of Ladang Permai Damai, laying the groundwork for fresh milk production to reduce reliance on imports.

By 2024, F&N had evolved into a multi-category regional F&B player with integrated capabilities, strong digital platforms, and a growing presence in Halal food, fresh milk, and health-focused products. Refer to Chart 6.

Chart 6: F&N changing business profile

Despite acquisitions and organic growth, revenue grew at a CAGR of 5.7%, while PAT rose at 5.8%. However, capital employed expanded faster, leading to a decline in ROE from 16.8% in 2019 to 15.2% in 2024.

As an investor, the key question is whether this ROE decline is temporary or structural. In the short term, ROE may remain flat or slightly lower as recent investments (in dairy, plant-based beverages, and logistics) weigh on returns without yet contributing fully to profits. Over the medium term (3–5 years), ROE has room to improve if profit margins expand through upstream and supply chain efficiencies, new product categories scale profitably, and export growth continues without excessive capital outlay.

F&N’s share price has trended down since peaking in April 2024. For signs of a rebound, watch these three areas closely - they could signal a turnaround in ROE and renewed investor interest. 

Currently, F&N falls into the border of the Gem and Quicksand quadrants in the Fundamental Mapper. Refer to the rightmost part of Chart 7. If it improves performance unnoticed by the market, it could move into the Goldmine quadrant.

Chart 7: F&N earnings, price, and position in the Fundamental Mapper

Is Khee San Finally Turning the Corner?

Khee San has weathered a turbulent seven-year period. After posting profits in 2018, it slipped into losses by 2019. By 2020, revenue had collapsed to just 20% of its 2018 level, weighed down by financial distress, operational setbacks, and external shocks like the pandemic.

In 2021, the company was classified as a PN17 financially distressed entity. Its regularisation plan - only approved in 2024 - involved a comprehensive equity restructuring and fundraising initiative aimed at restoring financial stability. Refer to Chart 8.

Chart 8: Khee San financial restructuring plan

Under the plan, Khee San’s share capital would range between RM 113 million and RM 167 million, translating to approximately RM 0.07 to RM 0.08 per share. Refer to Chart 9. The company has until August 2025 to complete the implementation of this plan.

Chart 9: Khee San pro forma effect of the restructuring plan

While full recovery is still in progress, there are signs of operational improvement. Although revenue in 2024 remained flat compared to 2021, gross profit margins have shown an upward trend. This improvement has translated into operating profits since 2023, a notable turnaround from the operating losses reported in 2021 and 2022. Refer to the right part of Chart 10.

Chart 10: Khee San share price and earnings 

However, to generate a 10% return on the restructured capital base, Khee San would likely need to triple its 2024 revenue - assuming it can sustain its current gross margins and keep selling, general, and administrative (SG&A) expenses in check.

Achieving such growth will likely take several more years. In this context, the current market price of RM 0.30 appears to reflect a significant degree of optimism. Refer to the left part of Chart 10.

How OFI is Quietly Becoming a Global Powerhouse

OFI manufactures and markets snack food and confectionery products. Between 2019 and 2024, OFI has transformed into a sustainability-driven, digitally savvy, and globally expanding company through strategic initiatives that have strengthened its market position.

Export sales now contribute approximately 65% of total revenue, reflecting OFI’s successful international expansion. Sustainability efforts include integrating solar energy at select manufacturing plants, reducing carbon emissions, and operating costs. Digital transformation has been a key focus, with an expanded e-commerce presence and stronger branding efforts on social media, enhancing direct engagement with consumers.

These initiatives have driven strong financial performance, with revenue growing at a CAGR of 8.5% over the past six years. Profitability has improved even more significantly, with PAT growing at a much higher CAGR of 24.9%, supported by gross profit margin expansion and declining fixed cost margins. 

Chart 11: OFI earnings, price, and position in the Fundamental Mapper

The various changes have positioned the company for long-term sustainable growth while maintaining its market leadership in Malaysia and beyond. Given these strengths, OFI falls into the low-risk, good-business segment of the Fundamental Mapper. Refer to the rightmost part of Chart 11.

The market price has trended upward in recent years, reflecting the company's improving prospects. Although it has pulled back from its three-year high, the current margin of safety appears limited. However, if earnings continue to grow while the stock price remains stable, the margin of safety could improve over time.

From Crumbs to Cash: How Hup Seng Is Quietly Winning the Game!

Hup Seng is a well-established player in the biscuits, crackers, and coffee mixes market. Over the past six years, the company has undergone significant leadership transitions and operational modernization.

Between 2019 and 2024, revenue grew at a 5% CAGR, while PAT expanded at an 8.2% CAGR. This higher profit growth was not driven by margin expansion but rather better control over fixed costs - including SGA expenses and Depreciation & Amortization. Over this period, fixed cost margins declined from 18% in 2019 to 15% in 2024, contributing to improved profitability.

Chart 12: Hup Seng earnings, price, and position in the Fundamental Mapper  

As such, ROE went from 26% in 2019 to 35% in 2024. The impact of these improvements is evident in the Fundamental Mapper, where Hup Seng ranks as one of the better-performing businesses. Refer to the rightmost part of Chart 12. However, its stock price has risen over the past year, and while it is currently below its past-year high, it still carries some investment risk.

The key question is whether the company can sustain its business improvements to justify a move into the Goldmine quadrant at its current valuation. Addressing variable costs and expanding margins could significantly enhance its positioning, making this a potential opportunity if executed effectively.

Methodology

There are 3 main statistics that I used in my analysis – median, lower quartile (Q1) and upper quartile (Q3). 

• These were based on the distribution of the respective metric. 

• Note that these statistics do not represent the total values for all the panel companies.

Refer to “How the Malaysian plantation sector performed over the past 10 years” for details on how I computed the median and quartiles and how I differentiate between the 2 bullet points above.

The data for the base rates were extracted from the Financial Statements for each company for the period 2002 to 2024 from Tikr.com. Note that it is comprised of companies with different financial year ends. 

The compiled data also serves as base rates for the sector. They are meant to provide an outside view (ala Daniel Kahneman) when analysing and valuing companies in this sector. 

Finally the various charts for the 4 companies - earnings, stock price and Fundamental Mapper – were taken from the Xifu app. You can download the Fundamental Mapper app now on Xifu to get investment insights into Bursa Malaysia companies.

A Sector in Motion

The evidence from both company-specific case studies and broader sector data points to an industry undergoing a measured but meaningful transformation. While headline metrics such as asset growth, ROE, and ROA suggest a sector still grappling with structural limitations, the underlying narrative is one of adaptation and quiet reinvention.

Companies like OFI and Hup Seng show how operational efficiency and strategic positioning can generate above-average returns even in a slow-growth environment. Meanwhile, F&N’s bold diversification and Khee San’s hard-fought recovery illustrate the spectrum of strategic responses underway. Not every company will succeed, but those that do are creating real shareholder value.

For long-term investors, this is a sector that rewards discernment over broad-brush bets. It is less about riding a rising tide and more about identifying the right boats - those equipped with the strategies, leadership, and operational foundations to navigate change and emerge stronger.

Malaysia’s snack and confectionery sector may still be flying under the radar - but that is precisely what makes it worth a closer look.

Next step

For investors intrigued by the sector’s evolution, this article provides a useful starting point, but not the final word. Each of the four companies profiled presents a distinct investment case, with varying levels of risk, return potential, and strategic execution.

To make an informed decision, a deeper dive into the fundamentals of each business - its financial health, competitive advantages, valuation, and future growth drivers - is essential. In a sector where the tide is turning but not every boat is rising, careful stock selection remains key.

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If the above article was useful, you can find more insights on how to make money in my e-book. The e-book is now available from Amazon, Kobo and Google Play.

PS: If you are in Malaysia or Singapore, the e-book can only be download from Kobo and Google Play. 

Disclaimer & Disclosure

I am not an investment adviser, security analyst, or stockbroker.  The contents are meant for educational purposes and should not be taken as any recommendation to purchase or dispose of shares in the featured companies.   Investments or strategies mentioned on this website may not be suitable for you and you should have your own independent decision regarding them. 

The opinions expressed here are based on information I consider reliable but I do not warrant its completeness or accuracy and should not be relied on as such. 

I may have equity interests in some of the companies featured.

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