STOCK IN FOCUS


SUPER GROUP LIMITED 
Super Group is a leading instant co'ee brand owner in Asia with an upstream ingredients processing business. We are con'dent of a positive earnings outlook for Super, underpinned by sales growth in fast emerging Southeast Asian markets with margin expansions on expected softening of raw material prices such as co'ee bean, sugar and palm oil. We are aware that co'ee sales is one of the few things that can grow even during recessions, and Super's brand equity' measured as top 3 in Asia by volume'could bolster that. Initiate with BUY at FV of S$2.70, representing over 30% upside potential.

21% earnings CAGR over FY12'14F. While we expect sales CAGR to be 9.7%, with bulk of growth coming from Thailand and Myanmar, we are positive on margin expansion resulting from softening commodity prices. We factored in expected price declines in co'ee beans, sugar and palm oil, and derived a weighted average positive impact of ~5% CAGR to gross margins over FY12'14F.

Co'ee sales outlook in emerging markets intact; recession unlikely to change the dynamics concerned.  Co'ee sales growth in the Southeast Asian emerging markets is buoyed by a growing population and a rise in real income per head. Instant co'ee penetration rates are also low compared to those of the developed markets. All these point to growth, and data suggests these emerging markets will grow at more than twice the rate of the world average's.

Valuation: BUY with FV of S$2.70. Super's current valuation of 15.3x FY12F earnings with a 4.6% dividend yield is a''ractive, relative to Asia'listed peer average of 20x. We value Super at peer average of 20x FY12F EPS, as we expect its PER valuation to rise on higher recognition of Super's brand equity (Super's brand is top 3 in Asia by volume, ranking only behind Nestl'' and Kraft  Foods) and potential brand premiumization (upside in RSP). Key risks are commodity price pressures and competition.

NEWS BUZZ

Keppel Corporation (S$11.10) 
Keppel FMO secures contract with CAG  
Keppel FMO Pte Ltd (Keppel FMO), a wholly'owned subsidiary of Keppel Integrated Engineering has bagged a 've'year maintenance contract from repeat customer Changi Airport Group (CAG). The latest contract comes on top of its existing agreements with the airport for the maintenance of its infrastructure, such as aircraft  pavements and air'eld lighting systems, the maintenance of passenger loading bridges and the aircraft docking guidance systems at Terminals 1 and 2. The deal will help boost the 'rm's international por''olio of mission' critical facilities management services. Keppel Integrated Engineering Limited (KIE) is the environmental technology and engineering division of Keppel Corporation Limited.

Tat Hong Holdings (S$0.985) 
Buy over leasing company
Tat Hong Holdings has agreed to buy over the entire share capital of Jiangsu Hengxinmao Financial Leasing (HXM) from Yongmao Holdings for about US$2.63mil. Jintan'based HXM, dormant since its incorporation in 2010, had a NAV of 16.48mil yuan (S$3.2mil) as at May 31 this year. Tat Hong said the acquisition would allow the group to operate 'nance leases of tower cranes more e'ectively and cost'e'ciently in China. Also, the Jintan city government has agreed to grant local 'nancial subsidy to HXM for 've years from commencement of its operations.

Sakari Resources (S$1.27) 
Q2 earnings slide 39%
Sakari Group reported a 39% year'on'year decline in net earnings to US$23.94mil for the 2Q12 and turnover remained 'at at US$238.01mil. EPS for the quarter slipped to US$0.02. It has declared a two US cents per share interim dividend, payable on Sept 13.   EPS doubled on a qoq basis on be''er managed cash costs and higher than expected ASPs. 1H earnings met circa 30% of our FY12F estimates. Our fair value is pending review after a teleconference later.

CapitaMalls Asia (S$1.62)  
Two more malls in Tokyo and Qingdao  
 CapitaMalls Asia Ltd (CMA) had acquired Olinas Mall in Tokyo for 22.8bil yen (S$364mil).   It is also developing its 'rst shopping mall in Qingdao, China, after inking a deal to acquire the site from Qingdao Vanke City Real Estate Co Ltd and Qingdao Shuangshan Gongmao Co Ltd. CMA said it 'nanced the acquisition using internal funds and external borrowings.   Including this development, CapitaMalls Asia now has 58 shopping malls in 36 cities in China, of which 43 are operational while the other 15 are being developed.
Source: The Business Times

Source: AmFraser