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Share price spurt unwarranted
Super delivered an in-line 4Q13 but the upside is now limited after a 5.4%
surge in the last session, likely in reaction to 1) confirmation of a sequential
recovery after a depressed 3Q, or 2) excitement over a 1-for-1 bonus issue.
FY13 net profit met 98% of our forecast and 101% of consensus. A final DPS of
7 Scts brings the full-year DPS to 9 Scts (also within expectations). With the
sales growth guidance lowered to 5-10% for Branded Consumer (BC) and 15%
for Food Ingredients (FI), we cut our FY14-15 EPS by 7-9%. Thus, our target
price (still based on 23.5x CY15 P/E, in line with Nestle Malaysia) drops to
S$4.20. After an unwarranted price surge, we downgrade the stock to a Hold
from an Add, preferring to wait for lower entry levels.
Branded consumer will see slower growth
4Q13 BC sales and full-year BC sales (65% of group) grew 3% yoy. This division
used to deliver 10% CAGRs but its growth has slowed as Myanmar's (2nd largest
market, 20% of group) growth stalled on currency effects, while Singapore (4th)
sales were lower as it exited the vending and canned drinks business. Thailand
(largest market) and Malaysia (3rd) continued to do well, with the former's 10%
yoy growth being driven by strong branding in southern Thailand and a push
into the north. Political uncertainty in Thailand, weaker ASEAN currencies and
natural disasters in the Philippines have led to a lower 5-10% growth guidance
for 2014. Among the new markets, only China is firing on all cylinders.
Food ingredients ? SE Asia replaces East Asia as engine
4Q13 FI sales shrank 7% yoy (weak China contributions) but FY13 growth was
still good at +17% yoy (vs. +34% in 2012, albeit from a smaller base). The 3Q
trend of more SE Asian clients replacing East Asian clients persisted in 4Q. To
counter the weak trends in East Asia, Super has taken back its China
distributorship, integrated its non-dairy creamer facility (to keep cost down)
and moved to higher value-add products. Sales growth guidance for FI is ~15%.
Confident of sustaining margins
While gross margins were on the uptrend in 2013 as commodity prices came off,
we think that they should weaken in 2014 as various raw materials see upward
price pressure. This could be offset by lower SG& A costs (post-2013 rebranding
exercise), thus keeping operating margins stable.
Margins should hold up, changing trends in BC and FI
Gross margins have moved higher in 2013 as the prices of a number of
ingredients (coffee, sugar and crude palm oil) drifted lower. These trends have
enabled Super to deliver higher operating margins (2013: 18.0%, 2012: 16.8%)
even as it embarked on a rebranding exercise in Singapore, Malaysia and China.
Given that coffee prices in Brazil are anticipated to surge due to a drought and
that sugar and CPO prices should also edge up, we expect 2014 gross margins to
be lower. Management maintains its view that any huge spikes in raw material
prices can be passed on to consumers. We do not expect lower gross margins to
pose too much of a dampener on operating margins, as elevated SG& A costs in
2013 (due to the rebranding exercise) could be tapering off.
With margins expected to be stable, the more important issue for Super is how
well Branded Consumer (BC) and Food Ingredient's (FI) sales are likely to
perform. Management is guiding for 5-10% BC sales growth and ~15% FI sales
growth. We think that the guidance is quite reasonable.
https://brokingrfs.cimb.com/XENorjC9sw-dCUKpNKxS0-pR-kxNWyqTJTHYGh1I2bx0UPBy8J3e0ZVMBGoUSQ9P1BJ2KDuJXco1.pdf
A depressed share price is more likely for M & A because nobody wants to pay a high price for any company. Anyway, I think the reason for bonus issue is probably to expand liquidity and reward long term shareholders. Yes, you can opine that it will push the share up. That's definite as it's a piece of good news. However, not too sure how high it can go. PE currently about 23. Latest results profits seem to have stagnate.
superuser ( Date: 25-Feb-2014 01:49) Posted:
Super will try to push their share price higher so as to make it attractive for any M& A.
Today close @ 3.90 is bullish despite it being a doji.
Should test $4 resistance tomorrow.
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Super will try to push their share price higher so as to make it attractive for any M& A.
Today close @ 3.90 is bullish despite it being a doji.
Should test $4 resistance tomorrow.
of course the below is just my humble opinion ni ...dyodd...bonus and dividends coming.
tea444u ( Date: 25-Feb-2014 01:21) Posted:
| Will there be an M & A soon? i believe Japan's Suntory may be making the offer if not Kirin? I read that Super will likely not accept any offer below $5 as the stock reached that px in August last year.....waiting waiting ... happily waiting... |
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Will there be an M & A soon? i believe Japan's Suntory may be making the offer if not Kirin? I read that Super will likely not accept any offer below $5 as the stock reached that px in August last year.....waiting waiting ... happily waiting...
1.The Company proposes to undertake a bonus issue (" Proposed Bonus Issue" ) of new
ordinary shares in the capital of the Company (" Bonus Shares" ) on the basis of one (1) Free Bonus
Share for every one (1) existing ordinary share in the capital of the Company (" Shares" ) held
by its shareholders (" Shareholders" ) as at a books closure date to be determined by the
directors of the Company (" Directors" ) for the purpose of determining the entitlements of
Shareholders (" Books Closure Date" ).
2. Proposed dividend of 7c.
Supergroup: Bullish Setup!
Link
Bullish Signal: Bullish reversal candlestick with RSI turning up and Stochastic bullish crossover!
Entry price: $3.66
Stop loss: $3.43
Profit target:
$4
Reward to risk raito: 1.3
...last: $3.65...
Supergroup today fly up like superman.
Wow.....today coffee so nice arh...........
Super Group - Turning the corner up to BUY
■ Upgrade to BUY. We think the worst is likely over for Super after the 15% drop in its share price following the release of a disappointing set of 3Q13 results in November.
■ Our channel checks suggest that end-user demand in the Philippines remains healthy while volumes should pick up again in Myanmar in 4Q13 with the kyat having stabilised.
■ We preview 4Q13 results. Expect FY13E revenue of SGD561m and recurring net profit of SGD85.5m, with the latter an above-consensus estimate.
4Q results likely to shrug off disappointing 3Q13
Three main factors led to Super Group?s disappointing 3Q13 results, but we note that things are taking a turn for the better.
(1) In Myanmar, the company?s second-biggest market, an unstable currency dealt a hard blow to sales and margins but with the situation stabilising, volumes should return in 4Q13.
(2) In the Philippines, revenue had plunged 51% YoY but our channel checks suggest that end-user demand remains healthy and some of the headline decline was partly due to de-stocking. We therefore expect QoQ improvements.
(3) Non-dairy creamer sales declined as its customers experienced lower demand but we expect management?s efforts to diversify customer base in this business to pay off over the next 1-2 quarters.
What?s Our View
Super is due to announce its 4Q13 results in end-February. We expect FY13E revenue of SGD561m, up 8% YoY, and recurring net profit of SGD85.5m, up 10% YoY. Our FY13F estimates are adjusted downwards by 3%, but still above consensus.
In our view, the current share price offers a good chance to accumulate the stock for its longer-term growth story even if weakness should persist for another 1-2 quarters. Our DCF-based TP is SGD4.45, pegged to 25x FY14E P/E, which is slightly above peer average but justified by its higher EPS CAGR of 13% over FY13F-15F.
Technical Analysis |
| Daily Chart |
Key risks include a prolonged political standoff in Thailand, which may hurt Super?s sales in Bangkok.
(Read Report)
DYODD
trade with care.........high PB stock!
bought into YHS instead
WanSiTong
You are spot on ! It went up today . But really can't afford to buy at this price.
WanSiTong ( Date: 16-Jan-2014 15:17) Posted:
part 2........
SUNTORY BEVERAGE
Suntory Beverage, the maker of Orangina and other soft drinks, said last year that it was prepared to spend about US$5 billion on deals. Its parent Suntory Holdings this week agreed to buy Beam Inc., which makes Jim Beam and Maker?s Mark whiskey, for US$16 billion.
Super ?is a very good platform? for Japanese acquirers, said Koh at Maybank. ?You have the distribution, you have the local know-how, and then on the Japanese side, typically they have very strong product research and development.?
As demand for instant coffee in Southeast Asia grows, consumption in Myanmar will expand at the fastest pace, according to Euromonitor. Sales in Thailand and the Philippines are the highest in the region, Euromonitor data shows.
Super introduced new branded coffee products in the expanding Chinese market in August.
In a market dominated by Nestle SA, demand for instant coffee in China will surge 52% between 2012 and 2017, Euromonitor said in March last year. Even as freshly ground brews gain popularity, instant versions will account for 98% of total China sales in 2017, Euromonitor said.
PROFIT GROWTH
Super generated average annual earnings-per-share growth of 21% in the past five years, according to data compiled by Bloomberg. That beat 15 drinks makers in developed Asia with a market value greater than $1 billion, including Kirin, Singapore?s Yeo Hiap Seng and Coca-Cola Amatil in Australia, the data show.
Super?s profit may rise 11% in 2015 to $108.8 million, according to analysts? forecasts compiled by Bloomberg.
Any food and drinks company looking to improve its Southeast Asian distribution -- a difficult and time-consuming task -- could consider buying Super, Andrew Chow, a Singapore- based analyst at UOB, said by phone. In Myanmar, for example, Super?s market share is as high as 50%, Chow said in a report last month. In China, its share is insignificant so far, he said.
Because Super expanded its branded coffee in China only in August, shareholders may resist any acquirer before those efforts yield results, Chow said.
APPEASING FOUNDERS
?They may not be that keen unless the price is really ridiculous,? he said. ?If they can graduate from an ingredients supplier in China to a consumer-branded supplier, there should be an argument for higher valuations.?
The founders of Super are unlikely to sell for a price as low as $5 a share because the stock was near that level as recently as August, Chow said. Super?s shares have surged more than fivefold in the last four years.
Chairman and Managing Director Teo Kee Bock, who pioneered Super?s combination of coffee, creamer and sweetener in one sachet, and two other founding directors owned about 33% of the shares as of March 2013, according to the company?s 2012 annual report.
Super may be more likely to buy assets than be acquired, said Yeo, the DBS analyst. Darren Teo, Teo Kee Bock?s son and the head of corporate strategy and business development, said in July that Super was planning its first acquisition in a decade, looking for coffee makers with established brands.
That may not stop bidders pursuing Super to accelerate Southeast Asian expansion, said Chow at UOB.
?It?s not easy to build up distribution very, very quickly,? he said. ?The attraction of Super Group is their strong distribution and decent branding.?
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part 2........
SUNTORY BEVERAGE
Suntory Beverage, the maker of Orangina and other soft drinks, said last year that it was prepared to spend about US$5 billion on deals. Its parent Suntory Holdings this week agreed to buy Beam Inc., which makes Jim Beam and Maker?s Mark whiskey, for US$16 billion.
Super ?is a very good platform? for Japanese acquirers, said Koh at Maybank. ?You have the distribution, you have the local know-how, and then on the Japanese side, typically they have very strong product research and development.?
As demand for instant coffee in Southeast Asia grows, consumption in Myanmar will expand at the fastest pace, according to Euromonitor. Sales in Thailand and the Philippines are the highest in the region, Euromonitor data shows.
Super introduced new branded coffee products in the expanding Chinese market in August.
In a market dominated by Nestle SA, demand for instant coffee in China will surge 52% between 2012 and 2017, Euromonitor said in March last year. Even as freshly ground brews gain popularity, instant versions will account for 98% of total China sales in 2017, Euromonitor said.
PROFIT GROWTH
Super generated average annual earnings-per-share growth of 21% in the past five years, according to data compiled by Bloomberg. That beat 15 drinks makers in developed Asia with a market value greater than $1 billion, including Kirin, Singapore?s Yeo Hiap Seng and Coca-Cola Amatil in Australia, the data show.
Super?s profit may rise 11% in 2015 to $108.8 million, according to analysts? forecasts compiled by Bloomberg.
Any food and drinks company looking to improve its Southeast Asian distribution -- a difficult and time-consuming task -- could consider buying Super, Andrew Chow, a Singapore- based analyst at UOB, said by phone. In Myanmar, for example, Super?s market share is as high as 50%, Chow said in a report last month. In China, its share is insignificant so far, he said.
Because Super expanded its branded coffee in China only in August, shareholders may resist any acquirer before those efforts yield results, Chow said.
APPEASING FOUNDERS
?They may not be that keen unless the price is really ridiculous,? he said. ?If they can graduate from an ingredients supplier in China to a consumer-branded supplier, there should be an argument for higher valuations.?
The founders of Super are unlikely to sell for a price as low as $5 a share because the stock was near that level as recently as August, Chow said. Super?s shares have surged more than fivefold in the last four years.
Chairman and Managing Director Teo Kee Bock, who pioneered Super?s combination of coffee, creamer and sweetener in one sachet, and two other founding directors owned about 33% of the shares as of March 2013, according to the company?s 2012 annual report.
Super may be more likely to buy assets than be acquired, said Yeo, the DBS analyst. Darren Teo, Teo Kee Bock?s son and the head of corporate strategy and business development, said in July that Super was planning its first acquisition in a decade, looking for coffee makers with established brands.
That may not stop bidders pursuing Super to accelerate Southeast Asian expansion, said Chow at UOB.
?It?s not easy to build up distribution very, very quickly,? he said. ?The attraction of Super Group is their strong distribution and decent branding.?
Super Group may be the best takeover option for beverage companies anxious to corner a piece of Asia?s expanding instant-coffee market, as long as they?re willing to pay up.
The maker of Super Coffee sachets offers suitors established brands and a distribution network across Southeast Asia, said UOB Kay Hian Pte. Japan?s Kirin Holdings Co. and Suntory Beverage & Food are among logical buyers that may need to offer at least US$2.2 billion ($2.8 billion) to convince Super?s founders to sell, said Malayan Banking Bhd. Such a bid would be the most expensive relative to net income for any coffeemaker in Asia, according to data compiled by Bloomberg.
Regional demand for food and drinks has climbed with rising wealth, and no peer in developed Asia has increased profit faster than Super in the past five years, the data show. Southeast Asia?s instant-coffee market is projected to expand 38% from last year to almost US$4 billion in 2017, according to Euromonitor International.
Super ?will definitely be one of the biggest beneficiaries of the increasing consumption,? James Koh, an analyst at Maybank in Singapore, said in a phone interview. ?The appeal here is you have a market leader in its space and you immediately get access to some very attractive markets.?
Candy Chng, a Singapore-based spokeswoman for Super, didn?t reply to an e-mail seeking comment on potential bids and didn?t answer calls to her mobile phone. Kan Yamamoto, a spokesman for Kirin, declined to comment, as did Suntory Beverage spokeswoman Tazuko Ikeda.
INSTANT COFFEE
Super, which sells Owl-branded coffee and instant cereal, owns factories from China to Malaysia, its website says. Branded products account for about 65% of the 27-year-old company?s revenue, while food ingredients make up the rest, according to Super?s most recent quarterly results.
It?s unusual for instant coffee makers of Super?s size to control their raw materials and production -- and that?s part of the company?s allure, according to Alfie Yeo, an analyst at DBS Group Holdings in Singapore.
?Super offers any potential buyer solid brands, an integrated ingredients and manufacturing chain, and an extensive marketing reach in Southeast Asia,? Yeo said in an e-mail.
Tokyo-based companies such as Kirin, Suntory Beverage or Asahi Group Holdings Ltd. would probably have to pay more than S$5 a share to buy or take control of Super, said Maybank?s Koh. That would be at least a 36% premium to yesterday?s closing price of $3.69.
Today, the shares climbed 1.4% to $3.74 at 11:08 a.m. in Singapore, the first gain this week.
EXPENSIVE BID
A $5-a-share bid would be valued at $2.79 billion, or about 29 times analysts? average estimate for net income this year. No coffeemaker in Asia has ever fetched such a multiple, and the industry median worldwide is 16, data compiled by Bloomberg show.
All the possible buyers named by Maybank have a history of targeting assets in Southeast Asia.
Asahi in 2011 laid out plans to buy assets across Southeast Asia as part of 2015 revenue goals, while Kirin failed in an effort to buy the food and drinks unit of Singapore?s Fraser & Neave Takuo Soga, a spokesman for Asahi, declined to comment when asked if the company would be interested in acquiring Super.
Ya agree. It is Super Play by the bb
KepoChicken ( Date: 16-Jan-2014 13:27) Posted:
share too expensive... if buy 5 lots...already $20K
ozone2002 ( Date: 16-Jan-2014 13:19) Posted:
wow $5.. that another $1+ more..
i rather buy food empire..lower P/ |
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share too expensive... if buy 5 lots...already $20K
ozone2002 ( Date: 16-Jan-2014 13:19) Posted:
wow $5.. that another $1+ more..
i rather buy food empire..lower P/E
Octavia ( Date: 16-Jan-2014 09:56) Posted:
| Bloomberg notes Super may be the best takeover option for beverage companies anxious to corner a piece of Asia?s expanding instant-coffee market, as long as they?re willing to pay up. According to stock brokers, the maker of Super Coffee sachets offers suitors established brands and a distribution network across SE Asia. Japan?s Kirin and Suntory Beverage & Food are among logical buyers that may need to offer at least US$2.2b (or more than S$5 a share) to convince Super?s founders to sell, according to Maybank-KE. Such a bid would be the most expensive relative to net income for any coffeemaker in Asia, and comes at a 36% premium to Super?s last closing share price of $3.69. Still, analysts believe the founders of Super are unlikely to sell for a price as low as S$5 a share because the stock was near that level as recently as August. Super?s shares have surged more than fivefold in the last four years. Regional demand for food and drinks has climbed with rising wealth, and data shows no peer in developed Asia has increased profit faster than Super in the past five years. SE Asia?s instant-coffee market is projected to expand 38% from last year to almost $4b in 2017, according to Euromonitor. Meanwhile, Super is tipped to be one of the biggest beneficiaries of the increasing consumption, as it offers any potential buyer solid brands, an integrated ingredients and manufacturing chain, and an extensive marketing reach in SE Asia. Super, which sells Owl-branded coffee and instant cereal, owns factories from China to Malaysia. Branded products account for ~65% of the 27-year-old company?s revenue, while food ingredients make up the rest. |
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wow $5.. that another $1+ more..
i rather buy food empire..lower P/E
Octavia ( Date: 16-Jan-2014 09:56) Posted:
| Bloomberg notes Super may be the best takeover option for beverage companies anxious to corner a piece of Asia?s expanding instant-coffee market, as long as they?re willing to pay up. According to stock brokers, the maker of Super Coffee sachets offers suitors established brands and a distribution network across SE Asia. Japan?s Kirin and Suntory Beverage & Food are among logical buyers that may need to offer at least US$2.2b (or more than S$5 a share) to convince Super?s founders to sell, according to Maybank-KE. Such a bid would be the most expensive relative to net income for any coffeemaker in Asia, and comes at a 36% premium to Super?s last closing share price of $3.69. Still, analysts believe the founders of Super are unlikely to sell for a price as low as S$5 a share because the stock was near that level as recently as August. Super?s shares have surged more than fivefold in the last four years. Regional demand for food and drinks has climbed with rising wealth, and data shows no peer in developed Asia has increased profit faster than Super in the past five years. SE Asia?s instant-coffee market is projected to expand 38% from last year to almost $4b in 2017, according to Euromonitor. Meanwhile, Super is tipped to be one of the biggest beneficiaries of the increasing consumption, as it offers any potential buyer solid brands, an integrated ingredients and manufacturing chain, and an extensive marketing reach in SE Asia. Super, which sells Owl-branded coffee and instant cereal, owns factories from China to Malaysia. Branded products account for ~65% of the 27-year-old company?s revenue, while food ingredients make up the rest. |
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Bloomberg notes Super may be the best takeover option for beverage companies anxious to corner a piece of Asia?s expanding instant-coffee market, as long as they?re willing to pay up. According to stock brokers, the maker of Super Coffee sachets offers suitors established brands and a distribution network across SE Asia. Japan?s Kirin and Suntory Beverage & Food are among logical buyers that may need to offer at least US$2.2b (or more than S$5 a share) to convince Super?s founders to sell, according to Maybank-KE. Such a bid would be the most expensive relative to net income for any coffeemaker in Asia, and comes at a 36% premium to Super?s last closing share price of $3.69. Still, analysts believe the founders of Super are unlikely to sell for a price as low as S$5 a share because the stock was near that level as recently as August. Super?s shares have surged more than fivefold in the last four years. Regional demand for food and drinks has climbed with rising wealth, and data shows no peer in developed Asia has increased profit faster than Super in the past five years. SE Asia?s instant-coffee market is projected to expand 38% from last year to almost $4b in 2017, according to Euromonitor. Meanwhile, Super is tipped to be one of the biggest beneficiaries of the increasing consumption, as it offers any potential buyer solid brands, an integrated ingredients and manufacturing chain, and an extensive marketing reach in SE Asia. Super, which sells Owl-branded coffee and instant cereal, owns factories from China to Malaysia. Branded products account for ~65% of the 27-year-old company?s revenue, while food ingredients make up the rest.
UOBKH noted that weakness in consumer markets like Myanmar and Philippines is already reflected in share price. In Myanmar, sales volumes have stabilized following a knee-jerk reaction of decline in sales volume (8%) following a 3-10% price increase. Super continues to enjoy early-mover advantages, such as a strong distribution network (with ~50% market share) In the Philippines, playing field remains competitive and Super?s plan is to focus on product innovation and development with partner San Miguel. 4Q13 turnover may be impacted by typhoon Haiyan 9M13 turnover was up 8% and 7% for Thailand and M?sia respectively. Singapore turnover dipped 3%. UOBKH reckons management?s 13% sales grown for FY2014 is achievable given rebranding exercise in 2013 and normalization in markets such as Myanmar UOBKH maintains Hold with shaved TP of $3.86 (from $4.50)
Maybe Macquarie likes to drink coffee much like me. I will wait for their tp to materialize before selling, lor.
