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Singapore “Flyer” Of The Week: Hozen Group

brand_logo_hosenThis week’s “Flyer” spotlight falls on Hozen Group (SGX: 5EV). Shares in the food producer, which puts fruit and vegetables into tins under the Hozen marque, jumped 7.5% to S$0.07 ahead of interim results next month. It also cans seafood under the Fortune brand.

The Catalist-quoted company, which reports figures twice yearly, said in February that annual revenues ticked up 3%. However, pre-tax profits slumped 57% on higher administrative expense and distribution costs.

Hozen, which is valued at S$24m, is what some might describe as a steady but unremarkable business. Since 2005, revenues have increased around 1% a year. Meanwhile, gross profits have risen around 4%.

However, after deducting operating expenses, which have been rising at roughly 7% a year, there is not much left over on the bottom line. Net income last year was barely changed from seven years ago. If not for a small exchange-rate gain the company would have been profitless.

By its own admission, Hozen is operating in a challenging environment. But in the Fast Moving Consumer Goods (FMCG) sector, it doesn’t take much to improve performance. A small increase in sales volume, a small increase in price and a small cut in costs can have a disproportionate impact on the bottom line. We’ll find out next month if Hozen has been able to make those baby-steps to improve its bottom line.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.