Super Group

[chialc88]

If you are not buying it, will you advise to short this at current PE aka price?


A Life not Reflected is a Life not Worth Living.

[CY09]

If you are not buying it, will you advise to short this at current PE aka price?


A Life not Reflected is a Life not Worth Living.

I assume this question is directed to me.

I don't believe in shorting due to the fact the market can be irrational for a long period of time. Hence, I may incur a large chunk of financing costs in order to counter the irrationality of the markets under the current SG CFD providers.

Secondly, a minor reason is that I may have to take 70% debt and 30% cash for the trade. One may argue one can set aside 40% cash to make it a 30% debt/ 70% cash trade. However, my personal view is that I rather put the 70% cash in an undervalued "long" investment w/o taking the 30% debt. It makes me sleep better at night.

[CityFarmer]

There is unconfirmed news on takeover of Super Group, with speculative offer price of at least $5 per share...

(not vested)

Richest coffee takeover in Asia seen with Super Group

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.
...
http://www.theedgesingapore.com/the-dail...group.html

[CityFarmer]

The company end-year result announced. Here is the summary extracted. A 1-for-1 bonus share is awarded.

(not vested)
----------
 FY13 revenue increased 7% YoY to S$557.0m on the back of growth in Branded Consumer and Food Ingredients sales
 FY13 net profit up 25% YoY to S$103.4m
 Final dividend of 7.0 SG cents per share, increasing total dividend for the year to 9.0 SG cents per share, an increase of 27% YoY
 The Company is proposing to undertake a bonus issue on the basis of 1 bonus share for every 1 existing share in the capital of the Company held by the shareholders

Ref: http://infopub.sgx.com/FileOpen/Super_Gr...eID=275751

[Tiggerbee]

The company end-year result announced. Here is the summary extracted. A 1-for-1 bonus share is awarded.

(not vested)
----------
 FY13 revenue increased 7% YoY to S$557.0m on the back of growth in Branded Consumer and Food Ingredients sales
 FY13 net profit up 25% YoY to S$103.4m
 Final dividend of 7.0 SG cents per share, increasing total dividend for the year to 9.0 SG cents per share, an increase of 27% YoY
 The Company is proposing to undertake a bonus issue on the basis of 1 bonus share for every 1 existing share in the capital of the Company held by the shareholders

Ref: http://infopub.sgx.com/FileOpen/Super_Gr...eID=275751

Stripping out the other income gains (non recurring), operating profit is actually down 7.2% year on year. Selling and distribution expenses had been rising for the past few quarters on higher marketing and promotional costs. Revenue growth had almost stalled for 2 straight quarters.

I had been seeing Super's white coffee on promotional offers for the past few months to compete with the promotions by Nestle and Oldtown. That's probably why the above costs are persistently high and which may become a norm.

(Not vested and don't intend to vest)

[CityFarmer]

The company end-year result announced. Here is the summary extracted. A 1-for-1 bonus share is awarded.

(not vested)
----------
 FY13 revenue increased 7% YoY to S$557.0m on the back of growth in Branded Consumer and Food Ingredients sales
 FY13 net profit up 25% YoY to S$103.4m
 Final dividend of 7.0 SG cents per share, increasing total dividend for the year to 9.0 SG cents per share, an increase of 27% YoY
 The Company is proposing to undertake a bonus issue on the basis of 1 bonus share for every 1 existing share in the capital of the Company held by the shareholders

Ref: http://infopub.sgx.com/FileOpen/Super_Gr...eID=275751

Stripping out the other income gains (non recurring), operating profit is actually down 7.2% year on year. Selling and distribution expenses had been rising for the past few quarters on higher marketing and promotional costs. Revenue growth had almost stalled for 2 straight quarters.

I had been seeing Super's white coffee on promotional offers for the past few months to compete with the promotions by Nestle and Oldtown. That's probably why the above costs are persistently high and which may become a norm.

(Not vested and don't intend to vest)

The higher marketing and promotional costs were due to its rebranding activities with a new logo and packagings. The increased costs might not be persistent.

(not vested)

[CY09]

Was asked by a friend recently to look at the counter after its full year result.

So just posting what I said before. Currently Super is trading at approx. 19x PE. However what is important to note is a high one-off other income [17M gain from disposal of associate] this FY (This does not happen very year). Stripping this out, Super net profit will be around 88Million, and that is a 7% YoY gain. Also, then its PE will be around 22.5x.

Given its brand name and good ROE, I think it is acceptable for Super to sell at 12-14x PE in 3 years . And judging from its profit growth, Super should be able to grow its profits 9% YoY for 3 years under optimistic projections. So what P/E should Supergroup be selling for to be 12-14x PE 3 years from now? In my view, Super should be selling for 15.5-18.5x PE at current period to be of a worthy buy.

Please take note Super Group is proposing bonus shares and thus current and near term prices may be distorted due to this bonus share.

[brattzz]

ain't bonus shares 1 for 1 equal to 50% dilution unless you are holding on for long term?

[CY09]

I have observed a trend that companies issuing bonus shares have their prices rising, e.g. Heeton. So I do not want to discount the possibility the bonus share will distort Mr. market's pricing. I do understand bonus shares have no material effect, but we are dealing with Mr. Market who is irrational.

[GPD]

Bonus issues is an corporate action telling the market to reward their shareholders. It works well in a rising market. See Maxi-cash. Lets see if it works in a stagnant market.