Super Group - Maybank Kim Eng 2015-11-13: Past the Worst

Super Group - Maybank Kim Eng 2015-11-13: Past the Worst SUPER GROUP LTD S10.SI 

Super Group (SUPER SP) - Past the Worst 

  • 3Q15 within expectations. NP fell 26% YoY, mainly due to weak regional currencies, and lack of new product launches. 
  • New product rollout has begun with selected countries in 4Q, with the rest in 1H16. Initial feedback is positive. 
  • Reiterate BUY with unchanged TP SGD1.42, 1SD above 5-year P/E. Catalysts from improving results, M&A, and dividends. 

What’s New 

  • 3Q15 in line. Revenue/NP fell 7%/26% YoY to SGD121m/7.4m. 
  • Branded Consumer (BC) sales fell 4% YoY while Food Ingredients (FI) fell 11%. BC sales were mainly hit by a poor showing in Malaysia, due mainly to the weak MYR, while FI did poorly in Indonesia, exacerbated by a weak IDR. So far, this is expected. 
  • However, Myanmar (c. 20% of BC sales) did surprisingly well. We had expected poor results due to the kyat’s depreciation. However, sales value actually improved YoY by our estimate. We suspect volume gains made up for the currency leakage. 
  • China (c. 10%) was another outlier performer, aided by pre-winter stocking. 
  • 9M15 NP accounts for 62% of our FY15E; However, we keep our forecasts intact. 
  • With stable currencies, we expect 4Q to improve not just QoQ, but YoY on the back of new coffee products, such as Essenso and Owl Kopitiam Roast & Ground. Early market feedback is positive. This momentum should extend into 2016 as well. 
  • By our estimates, Super maintained not just volume growth, but value growth in difficult markets, such as Myanmar and Thailand in 3Q15, despite poor consumer sentiment and currency challenges. 
  • Further, this was done without new products or significant A&P spending. With new products rolling out across all markets by 1H16 and with lower currency volatility, we believe 2016 could see a recovery. 

What’s Our View 

  • Maintain BUY with unchanged TP of SGD1.42, at 1SD above its 5- year P/E mean. 
  • We expect catalysts to come from a potential recovery in FY16 with new products, M&A and improving dividends.

Gregory Yap Maybank Kim Eng | http://www.maybank-ke.com.sg/ 2015-11-13
Maybank Kim Eng SGX Stock Analyst Report BUY Maintain BUY 1.42 Same 1.42