4th time doing this! Let me know your thoughts in the comments below 
See my previous analysis here:
A2M: http://hotcopper.com.au/threads/a2m-analysis.2694137/
BFC: http://hotcopper.com.au/threads/bfc-analysis.2693150/
VIT: http://hotcopper.com.au/threads/vit-analysis.2697198/
Super Group Ltd: SGX:S10 www.supergroupltd.com
Current situation: Price: $0.71 Market Cap: $791.99M 52 week low+high: $0.68 - $1.54 (Source: Google Finance, https://www.google.com/finance?q=SGX%3AS10&ei=85nCVpGaO4mI0gT7sr3oBQ
Who is?
Founded in 1987, Super Group is a leading regional integrated instant food and beverage brand owner and manufacturer. They operate in two segments: Branded Consumer (BC) which is made up of primarily instant coffee, instant cereals and instant tea mixes products. Super is one of the leading players in the instant food and beverage
industry in Southeast Asia with a portfolio of over 150 instant beverages and food products. And;
Food Ingredients (FI): This is the raw material selection and manufacturing capabilities of instant soluble coffee powder, cereal flakes and non-dairy creamer. Therefore these two segments offer both B2B and B2C selling pathways.
Super has 15 manufacturing facilities in China, Myanmar, Thailand, Malaysia, Singapore and Vietnam. They have a portfolio of over 150 instant beverages and food products which are then distributed to 52 different countries around the world. Super has a 3 pronged strategy of product innovation, branding, and geographical diversification.
Financials: [1]
|
Column 1 |
Column 2 |
Column 3 |
Column 4 |
Column 5 |
Column 6 |
| 0 |
All in S$ |
2014 |
2013 |
2012 |
2011 |
2010 |
| 1 |
Revenue (‘000)[/B] |
539,461 |
557,009 |
519,268 |
440,972 |
351,832 |
| 2 |
NPAT |
71,591 |
103,364 |
82,564 |
63,871 |
59,335 |
| 3 |
S’holders equity |
497,562 |
466,934 |
398,917 |
366,907 |
329,750 |
| 4 |
EPS (cents) |
6.17 |
8.96 |
7.09 |
5.55 |
5.33 |
| 5 |
NAV per share |
44.62 |
41.87 |
35.78 |
32.91 |
29.58 |
| 6 |
Final Div’d per share |
2.1 |
7.00 |
5.10 |
3.80 |
3.60 |
| 7 |
Div payout % |
50.28 |
50.22 |
50.08 |
52.24 |
50.97 |
| 8 |
ROE % |
14.26 |
23.08 |
20.64 |
17.77 |
19.23 |
| 9 |
ROA % |
11.18 |
17.50 |
15.12 |
13.04 |
14.38 |
| 10 |
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
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/201508121534371779105650_en.pdf
Article: http://fifthperson.com/3-reasons-why-supers-stock-has-been-in-free-fall/
TMF: Article on Balance sheet: ****************.sg/2016/01/14/can-super-group-ltd-hold-up-in-a-recession/
Super Brand starts journey in Bangladesh: http://www.thedailystar.net/lifestyle/check-it-out/super-brand-starts-journey-bangladesh-511465
