Above expectations. FY12 results were above expectations as Super posted strong earnings growth to match its growing reputation. Stripping out exceptional items, recurring net profit came in at SGD77.7m, up 43% yoy. Management announced a final dividend of SGD5.1cent/ share, bringing full-year dividend to SGD7.1cent, as per its dividend payout guidance of 50% which they intend to keep.

Toasting a good year. FY12 profit growth was driven by revenue growth of 18% yoy, with consumer segment achieving 12% growth and ingredients sale growing 23%. During this year, the Group made progress into new markets like Philippines, which doubled in sales and maintained market share in key growth ASEAN markets. Its pedigree as a ingredient supplier also grew, with high customer take-up for its Non- Dairy Creamer (NDC), which increased capacity to 125,000 mtpa.

Strong 4th quarter, healthy trends. 4th quarter was strong, with 16% yoy growth in consumer segment partly due to recovery in Thailand which was affected by floods. Ingredients sale was a major contributor, enjoying the full benefit of the higher NDC capacity during a seasonally high quarter. Gross margins improved to 34%, which is very promising given the higher contribution from ingredients sale.

Expect more growth opportunities. In 2013, we expect the introduction of Freeze-Dried soluble coffee and Botanical Herbal Extract (towards the end of the year) into its ingredients portfolio. Other than additional revenue, with these new capabilities, we also expect Super to expand its product mix and quality to complement its rebranding efforts. This will expand its consumer product market and help establish brand equity over the medium-longer term. We also expect Super to continue leveraging on its growing B-2-B customer network for ingredients sale.

Reiterate BUY with a higher TP. We expect raw material environment to remain favorable to margins at least over the next 2 quarters, with commodities such as sugar and CPO hitting lows in 4Q2012. Given the stock’s increasing investability and scarcity premium of quality F&B names, we peg our higher TP of SGD4.80 to 30x FY13F. Heightened M&A activity within this space globally may also trigger further re-rating. Reiterate BUY.

Source: Maybank Kim Eng Research - 28 Feb 2013