The rally was not entirely a surprise, given that the company’s pre-tax profit rose at a three-year CAGR of 17.9% — from RM681.6 million in FY2012 to RM1.1 billion in FY2015. Net profit more than doubled from RM427.1 million in FY2012 to RM908.5 million in FY2015.

Based on the company’s 2015 annual report, its property division generated 40% of its operational income, followed by credit financing, plantations, trading of building materials and petroleum products, fertiliser trading and automotive.

Hap Seng has been generous with its dividends, with dividend per share doubling from

16 sen in FY2013 to 30 sen by FY2015. Its RM7.75 close on Aug 11 implied a 3.9% yield for FY2015.

It will be tough for the company to maintain the high returns. In its 2015 annual report, the diversified group says it believes 2016 will likely be a difficult year, given the weak and uneven global growth on top of heightened volatility in the global financial markets.

“The slowdown in the economic growth of China, Malaysia’s largest trading partner, may limit the nation’s export growth prospects. Although the expected full-blown El Niño phenomenon may result in the easing of the high palm oil stockpile, and hence, stronger crude palm oil (CPO) prices, the overall impact may be somewhat offset by the lower CPO production caused by the extremely dry weather,” Hap Seng says.

Its plantation division, held through listed subsidiary Hap Seng Plantations Holdings Bhd, has a total area of 39,803ha in Sabah and faces higher labour costs due to the higher minimum wage. It will, however, continue ongoing efforts to improve its fresh fruit bunch yields, CPO and palm kernel extraction rates.

As for property, the diversified group expects the sector to be subdued as a result of the stringent lending measures and the oversupply risks in the high-end residential segment.

Hap Seng’s developments cater for the highend market, such as its maiden premier serviced residence in Jalan Tun Razak — The Horizon Residences — and Nadi Bangsar Service Residence in Bangsar, Kuala Lumpur. Nadi Bangsar is slated for completion in 2017. It also has an ongoing development, D’Alpinia Business Park, in Puchong South.

“However, the relatively weaker ringgit may create an opportunity for foreigners to enter the property market in Malaysia at a substantial discount, which we believe will continue to support and shore up demand for high-end residential properties at prime enclaves in the Kuala Lumpur city centre. Despite the muted property market outlook for 2016, we are optimistic about the long-term growth trajectory of property developments in the prime locations of the Klang Valley,” the company says.

Hap Seng expects its automotive division to perform better with the anticipated introduction of newer and more exciting models despite the Malaysian Automotive Industry’s forecast of a slight reduction in total industry volume this year.

Hap Seng is a dealer for Mercedes-Benz luxury passenger cars and distributes Mitsubishi and Mercedes-Benz commercial vehicles. The introduction of a new range of Mercedes-Benz SUVs — the GLC, GLE and GLE Coupe — and the launch of the new E-Class and A-Class will further support sales in 2016, it says.