Super Group

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(01-12-2014, 02:29 PM)zerobeta Wrote: why so many folks focus on their consumer brand segment when (i think) their value and growth story actually come from their food ingredients segment...

i'll give a very low single-digit growth rate for their CB segment with declining margin... I drink instant coffee almost every day but as an Indonesian working in HK, my awareness of their "Super" brand is almost non-existent... I just checked for instant coffee products in Wellcome and ParknShop (both are the largest groceries in HK) but I didnt find any of their products (i easily found Old Town, Nescafe, and Ah Huat).... so i think they have a strong presence in Singapore and perhaps Malaysia, but hardly elsewhere... how can they penetrate into other markets when instant coffee is such a commoditized product and there are already so many established brands out there?

food ingredient is a different story.... this segment may not carry a brand and hence it has a lower margin but it's a very scalable and sustainable operation as competition is very low and they can easily install extra capacity... please enlighten me if i'm wrong, but i haven't seen any big companies making food ingredients for coffee, cereals and creamer in the region... they are sort of like Samsung of the F&B industry, making instant F&B products in a highly competitive industry but at the same time providing "ingredients" for their rivals... for the FI segment, I can give a higher growth rate especially after their herb extraction and LGSS plants commence operations....

that being said, with the current PE of 20x, much lower growth in the future (law of high base) and more downside to margin, I think the company is still very expensive at the moment....

When I see food ingredient I was thinking oh good - finally they stop buying from their competitor and maybe the surplus can be sold to other people. To me it sounds like a cleaning company now decides to make their own detergents - it's of cos fantastic, if done well. Regardless, this is a good way to create more management level jobs for my family members. 

IIRC Viz Branz and/or Food Empire also had their own food ingredient factories  for their 3-in-1 coffee at various scale. Food empire was (IIRC, again Big Grin ) expanding this part of their biz to control the supply of key ingredients. That was probably a hip thing to do few years back when the price of commodities were fluctuating. I am no fan of overly long "vertically integrated" small company. 

And another big bro Nestle. I dont think they are going to buy from Super. If they do, it could be done to cut cost on Nestle side. In this scenario, Nestle would probably hedge Super and Super hedge the raw materials supplier- only the farmers got ripped off.
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SSHs have been reducing their stake in the company. The trend has been happening since 2015, and continue with the following two recent disposals

http://infopub.sgx.com/FileOpen/_2015-09...eID=371118

http://infopub.sgx.com/FileOpen/_Form_3-...eID=371121

(not vested)
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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(29-09-2015, 08:33 PM)CityFarmer Wrote: SSHs have been reducing their stake in the company. The trend has been happening since 2015, and continue with the following two recent disposals

http://infopub.sgx.com/FileOpen/_2015-09...eID=371118

http://infopub.sgx.com/FileOpen/_Form_3-...eID=371121

(not vested)

It could be that their clients are asking for cash back with the volatile environment these days.
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Perils of paying too much for growth? The price now however looks more and more interesting to me consider the 20-30x PE you had to pay just one year ago.
http://theasiareport.com - Reflections From Finding Value In Asia
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Company is facing temporary headwinds and growth slow down in some markets. 

Current price of $0.87 looks attractive, given its earnings power.

The question is will their focus on building brands and premium products will erode ROE...and will they be forced to take on more debt?
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Hey guys ! 19 year old Australian investor here and Super Group caught my attention so did some research on them, originally posted this on HotCopper but didn't get much attention.
Please let me know what you think or if I have made any mistakes!

Super Group Ltd: SGX:S10 www.supergroupltd.com

Current situation: Price: $0.71 Market Cap: $791.99M 52 week low+high: $0.68 - $1.54 (Source: Google Finance, https://www.google.com/finance?q=SGX%3AS...0gT7sr3oBQ

Who is?

Founded in 1987, Super Group is a leading regional integrated instant food and beverage brand owner and manufacturer. They operate in two segments: Branded Consumer (BC) which is made up of primarily instant coffee, instant cereals and instant tea mixes products. Super is one of the leading players in the instant food and beverage industry in Southeast Asia with a portfolio of over 150 instant beverages and food products. And;
Food Ingredients (FI): This is the raw material selection and manufacturing capabilities of instant soluble coffee powder, cereal flakes and non-dairy creamer. Therefore these two segments offer both B2B and B2C selling pathways.

Super has 15 manufacturing facilities in China, Myanmar, Thailand, Malaysia, Singapore and Vietnam. They have a portfolio of over 150 instant beverages and food products which are then distributed to 52 different countries around the world. Super has a 3 pronged strategy of product innovation, branding, and geographical diversification.

Financials: [1] (I had a neat table, but this format doesn't seem to allow it Sad )

All in S$

2014
2013
2012
2011
2010

Revenue (‘000)

539,461
557,009
519,268
440,972
351,832

NPAT

71,591
103,364
82,564
63,871
59,335

S’holders equity

497,562
466,934
398,917
366,907
329,750

EPS (cents)

6.17
8.96
7.09
5.55
5.33

NAV per share

44.62
41.87
35.78
32.91
29.58

Final Div’d per share

2.1
7.00
5.10
3.80
3.60

Div payout %

50.28
50.22
50.08
52.24
50.97

ROE %

14.26
23.08
20.64
17.77
19.23

ROA %

11.18
17.50
15.12
13.04
14.38

Debt to equity ratio

0.22
0.23
0.30
0.31
0.31

As see in the table, the numbers are very stable and consistent, not fluctuating wildly, and return on equity is very enticing in my opinion.

Also, for the quarter ended 30 September 2015, they listed Current Assets at S$348.8M and Current Liabilities of S$110.0M. This gives Super Group a current ratio of 3.2. Of the S$348.8M in assets, S$70.8M is made up from cash. Personally I like my current ratios above 2, because the higher the ratio the greater the liquidity of the company. Now excluding Super Group’s inventory of S$112.3M we still get a quick ratio of 2.2 which is a big plus in my books.

Also in Jan 2016 Super Group started to initiate share buybacks from the open market at prices close to S$0.70, suggesting that Management perhaps they are good value/undervalued at current levels.

Summed up my basic likes and dislikes about Super Group:

What I like:

-Sector: I won’t beat around the bush, I like the consumer staples sector, and it’s fairly predictable, consistent and always room to grow. I know exactly what I’m getting, there’s nothing fancy about this business and I know exactly what I’m getting.

-Financials: As I’ve noted above the financials are consistent and stable, very attractive ROE and ROA which is a major factor in what I look for a very low debt, very positive position in my eyes.

-Positive Brand Image: In 2014 Super was awarded the 31st brand position in The Brand Finance Top 100 Singapore Brands Report with a brand value of USD201m. Also in 2014 annual Investor’s Choice Awards organized by the Securities Investors Association Singapore , the Group was named runner-up for the Most Transparent Company Award in the Food & Beverage category.

Enough of the positives, here's what I don't like:

-Currency Risk: Now this certainly can be either a good or bad thing depending, but I’ve decided to put it as a negative, Super Group has faced and will continue to do so, challenges in terms of weaker currencies especially in some SEA countries compared to the Singapore dollar and US dollar. Super management must be aware and able to handle these risks and differences to continually run a successful business.

-Competitors: Nestle is a huge player in SEA as the owner of Nescafe, Milo (Huge in SEA for some reason!) and although indirect, Maggi as well. They have a much larger market cap and therefore are better positioned in terms of being able to flex their pricing power muscle.

-Diversification: Even though they operate in the consumer staples sector, traditionally a reliable sector, they don’t offer a huge amount in the terms of diversification besides their coffee and coffee related products, therefore increasing their risk if certain trends or attitudes change.

Overall

The share price has been battered recently, and this article does a good job explaining why www.fifthperson.com/3-reasons-why-supers-stock-has-been-in-free-fall/ although I believe there is current value and today’s prices. They are in the safe consumer staple sector, very solid financials, easy to understand business, and good business model. Full disclosure once my Interactive Brokers account is set up I will be investing in Super Group Smile

A relatively short analysis compared to usual but If you’ve read this far, thank you so much! Keep in mind I am not a professional! DYOR

Notes:

[1] Super Group Financials: http://www.supergroupltd.com/html/ir_highlight.php

Helpful Links & Recent/relevant Articles:

Factsheet: http://www.supergroupltd.com/attachment/...650_en.pdf

Article: http://fifthperson.com/3-reasons-why-sup...free-fall/

TMF: Article on Balance sheet: https://www.fool.sg/2016/01/14/can-super...recession/

Super Brand starts journey in Bangladesh: http://www.thedailystar.net/lifestyle/ch...esh-511465
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In Consumer Market, we just can't afford to omit 2015 figures and recent performances.

Just my Diary
corylogics.blogspot.com/


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(17-02-2016, 01:00 PM)corydorus Wrote: In Consumer Market, we can't just afford to omit 2015 figures.

Was going off their EOY figures on Super Group's site and they only have up until 2Q 2015 Sad
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Hi the SGX website has up to 3Q2015. Here are my observations:

http://infopub.sgx.com/FileOpen/Super_Gr...eID=377873

Debts has increased. and profitability has decreased significantly.

Extrapolating its current cashflow for 9 months, it is just able to sustain last year's dividends of 3.1 cents. It means Super has to continuously roll over its debts and not make repayments. Therefore, current dividends of 3.1 cents is not sustainable. Perhaps dividends of 2-2.5 cents is more reasonable. Assuming a div yield of 4% (CPF SA rate), the shares should be worth 60 cents at best.

Competition

While Nestle is indeed a competitor, there are more competitors to Super such as Power Root bhd. Power root has quite a good branding strategy in SEA and can be seen as a tough competitor to Super. Food Ingredients wise, Super has been expanding quite well, however, this is a low margin business.
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(17-02-2016, 01:17 PM)CY09 Wrote: Hi the SGX website has up to 3Q2015. Here are my observations:

http://infopub.sgx.com/FileOpen/Super_Gr...eID=377873

Debts has increased. and profitability has decreased significantly.

Extrapolating its current cashflow for 9 months, it is just able to sustain last year's dividends of 3.1 cents. It means Super has to continuously roll over its debts and not make repayments. Therefore, current dividends of 3.1 cents is not sustainable. Perhaps dividends of 2-2.5 cents is more reasonable. Assuming a div yield of 4% (CPF SA rate), the shares should be worth 60 cents at best.

Competition

While Nestle is indeed a competitor, there are more competitors to Super such as Power Root bhd. Power root has quite a good branding strategy in SEA and can be seen as a tough competitor to Super. Food Ingredients wise, Super has been expanding quite well, however, this is a low margin business.

Awesome thanks CY09 !

Will read through it now Smile
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