Towards Financial Freedom
Super Group - A Lift From Strong Ingredient Sales
Super's recurring 4Q12 net profit of SGD20.5m (+29% y-o-y, +55% q-o-q) was above our SGD17.6m projection although the positive impact from better ingredients sales was partly offset by higher operating costs. In this update, we: i) raise our FY13 and FY14 earnings estimates by 5% and 11% respectively on higher sales assumptions, and ii) update our DCF model, projecting a 8% CAGR from FY15-FY18 and a 3% terminal growth rate, deriving a higher TP of SGD3.58. We see Super evolving into an established Asian consumer staple play with a geographical reach that spans from China to Indonesia. However, its current valuation at ~23x FY13 PE could limit its near-term upside. Maintain NEUTRAL.
Key 4Q12 highlights are as follows:
- 4Q12 revenue expanded by 29% y-o-y to SGD156m (our estimate: SGD132m) onbetter-than-expected ingredient sales, which grew by 50% to SGD67m (our estimate: SGD44m) from the acquisition of new clients in Thailand and Indonesia. Its annual production capacity has increased by 50,000 tonnes since 3Q11 to 125,000 tonnes in FY12, while utilisation was at ~65%.
- Branded product sales saw healthy 16% growth to SGD89m (our estimate: SGD88m)on broad-based growth from its key markets such as China, Myanmar and Thailand.
- GPM increased by 1.8ppt y-o-y to 34.3%, slightly below our 34.7% projection due tohigher mix of ingredient sales. GPM for branded and ingredient divisions are likely to be in line with our projected 38% and 26% respectively.
- Operating expenses, as a percentage to sales, declined by 1.1ppt to 18.7% due tobetter operating efficiency.
Introducing estimates for 1Q13-4Q13. We raise our FY13 and FY14 revenue forecasts by 7% and 10%, which lift our earnings estimates by 5% and 11% respectively. In addition, we are introducing our projections for 1Q13-4Q13. Earnings growth over the next two quarters is likely to be commendable at +43% y-o-y and +34% y-o-y to SGD23m and SGD22m respectively on favourable low raw material prices compared to a year ago.
Source: OSK
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
