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Hong Chew Eu
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Retired Group CEO of i-Bhd. Now a full time blogger
From Boom to Bleed: Can Destini Berhad Pull Off a Comeback?
Over the past six years, Destini Berhad’s positioning has evolved from branding itself as a “diversified engineering group” in 2019 to a “globally engaged engineering solutions provider” by 2024. However, its financial performance over this period has been far from inspiring.
In 2024, Destini’s annual revenue stood at just one-third of its 2019 level. It recorded a profit in only one of the past six years. These persistent losses were driven by a combination of structural dependencies, external industry challenges, and internal inefficiencies.
A key issue has been Destini’s historical reliance on government contracts, particularly in the defence and marine sectors - areas where contract flows have diminished in recent years.
Aggressive expansion in the previous decade left the Group with a high fixed cost base. The situation was further exacerbated by impairments on receivables, goodwill from past acquisitions, and obsolete inventories.
The various issues faced by Destini is reflected in its “Quicksand” position on the Fundamental Mapper.
Recognizing these weaknesses, Destini has begun pivoting toward more commercially driven and sustainable sectors, including renewable energy and rail mobility. While the turnaround is still a work in progress, the following will be key indicators of success:
• Consistent operating profits across core segments, without relying on asset revaluations or exceptional items.
• New contract wins in future-focused sectors like renewables and electric rail maintenance.
• Operational restructuring, including cost reductions, disposal of underperforming units, and a streamlined corporate structure.
• Improved financial discipline, evidenced by stronger operating cash flow, reduced debt levels, and less dependence on equity fundraising.
Waiting for the Wheels to Turn: Tan Chong's Path to Recovery
Over the past six years, Tan Chong Motor Holdings has seen a steady decline in revenue, with 2024 revenue falling to about half of what it was in 2019.
• Demand for its core Nissan brand weakened amid intensifying competition in Malaysia and a limited pipeline of new, competitive models.
• Once-promising regional markets such as Myanmar and Vietnam were impacted by political instability and regulatory challenges, prompting a pullback in operations.
• The COVID-19 pandemic and subsequent global supply chain disruptions affected both sales and production.
• Tan Chong focused on cost containment and right-sizing in the face of these demand challenges also constrained growth and delayed a top-line recovery.
As a result, the Group recorded consecutive losses from 2020 through 2024, accompanied by a decline in its share price. Nevertheless, Tan Chong is currently undergoing a turnaround, as reflected in its positioning on the Fundamental Mapper.
A successful recovery will depend on a product-led strategy, stronger positioning in the commercial vehicle and electric vehicle segments, and more strategic use of its substantial asset base.
Importantly, Tan Chong remains financially sound. With a strong asset base, manageable debt, and adequate liquidity, the Group is well-positioned to weather short-term headwinds and has the runway to deliver on its turnaround plans.
ROE Down, Investments Up—Is F&N Building for a Breakout?
Over the past six years, Bursa Malaysia 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.
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
A gold proxy is a stock whose stock price moves in tandem with gold prices.
The rationale for investing in a gold proxy rather than directly in gold is the belief that gold price changes have some "multiplier" effect on the proxy. In other words, you can make more. Of course, the risk could be higher.
In my earlier analysis of Bursa gold jewellers covering 2007 to 2021, I found that the correlation between gold prices and stock prices was not significant.
I have now updated the analysis to cover till 2024 as gold prices have been on an uptrend over the past 2 years.
If you want to know more about the latest findings, come join the podcast tonight
Bursa Malaysia-listed confectionery company 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.
Under the plan, Khee San’s share capital would range between RM 113 million and RM 167 million, translating to approximately RM0.07 to RM0.08 per share. The company has until August 2025 to complete the implementation of this 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.
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.
How Oriental Food Industries is Quietly Becoming a Global Powerhouse
The Oriental Food Industries Holdings (OFI) group 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 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.
The various changes have positioned the company for long-term sustainable growth while maintaining its market leadership in Malaysia and beyond. Given these strengths, it is no surprise that OFI falls into the low-risk, good-business segment of the Fundamental Mapper.
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 Industries Berhad is a well-established player in the biscuits, crackers, and coffee mixes market, with its products marketed under several brand names. 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 Selling, General & Administrative (SG&A) expenses and Depreciation & Amortization. Over this period, fixed cost margins declined from 18% in 2019 to 15% in 2024, contributing to improved profitability.
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. 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.
Hwa Tai’s business overhaul: Will it finally be profitable?
Between 2019 and 2024, Hwa Tai revenue grew at 8% CAGR. This increase can largely be attributed to strategic market expansion, digital transformation, new product innovation, and sustainability initiatives.
While Hwa Tai has seen steady revenue growth, its high operating costs, competitive pressures, financial obligations, and supply chain challenges have led to continued net losses. As such you should not be surprised to see that it is classified as a high-risk, low business performance company in the Fundamental Mapper.
For most of the time, it has been operating below its breakeven levels resulting in operating losses. To go beyond its breakeven levels, it can either grow revenue, improve its margins, reduce fixed costs or have a combination of them.
The revenue growth is a positive sign that resulted in positive operating profits in 2024. The company is working on cost optimization and operational efficiencies, and we can see some improving gross profit margins since 2022. Fixed cost margin has also been steady.
Its broadened market reach, improved sustainability efforts, upgraded operational efficiency, and adaptation to digital transformation trends provide hope that these improvements can be sustained. If so, then there is an opportunity for the company to improve its business performance.
When you look at the stock price trends, you can see that the market has yet to take these into account.
The key takeaway: While Hwa Tai has struggled with profitability, recent improvements suggest a potential turnaround. However, the market has yet to reflect this in its share price.
OCB’s Big Business Shift: Could This Be the Next Breakout Stock?
While OCB reports its performance under four business segments—Consumer Foods, Bedding Products, Building Materials, and Property Development—the majority of its revenue and profits come from the Consumer Foods segment.
Over the past five years, the company has undergone significant business restructuring. In 2022, OCB introduced Property Development as a new segment, while in 2024, it discontinued its Building Materials business. This strategic shift has allowed the company to focus on higher-margin businesses, positioning it for long-term growth. However, the transition has also presented short-term financial challenges.
• Revenue has rebounded strongly after a dip in 2021, largely driven by the strong performance of the Consumer Foods segment (refer to the leftmost chart).
• The Property Development segment is still in its early stages, but it has started contributing revenue and represents a potential long-term growth driver.
• The discontinuation of the Building Materials segment removed a lower-margin business and is expected to improve operational efficiency. In the short term, however, this exit resulted in a financial loss in 2024 due to restructuring costs.
After experiencing significant losses in 2019 and 2021, OCB returned to profitability in 2023. However, in 2024, net profit declined, primarily due to the disposal of a subsidiary and higher tax expenses. Despite this, the company remains in a much stronger financial position than in previous years, with improved cash reserves and profitability trends.
Currently, OCB is classified in the Turnaround quadrant on the Fundamental Mapper (refer to the rightmost chart), indicating that its business fundamentals have improved but are not yet fully recognized by the market.
Despite its financial recovery, OCB’s stock price has remained relatively stagnant over the past three years, suggesting that the market has yet to reflect the company’s better prospects.
If the stock price remains unchanged while financial performance continues to improve, OCB will eventually move into the Goldmine quadrant, where both fundamentals and valuation will align favourably for investors.
