Super Group

Super Group: UOB Kay Hian notes that the recent 10.4% share price retracement from its high offers attractive entry levels as the fundamentals remain intact. Catalysts include weaker raw material costs and positive response from its push into China’s consumer branded market. The group has soft-launched its 3-in-1 coffee in China in 1Q13, and early indications are positive. From a zero base in 4Q12, 3-in-1 coffee already accounts for 2-3% of group consumer branded sales in 1Q13. The official launch in China is targeted in 3Q13 and management is targeting to achieve 9% of its consumer branded segment sales from China (vs 2- 3% as at 1Q13). As an indication, China tier-1 city per capita coffee consumption is 5 cups/year, which compares with 400-500 cups in more established markets. On its other key markets, sales in Myanmar is normalising after the unrests, competition in Indonesia is also exhibiting signs of normalising. Mgmt hopes that the growth in Philippines and China will help offset weakness in Indonesia and Myanmar. Overall, the group hopes to deliver a 10-15% y/y top-line growth from the consumer branded segment in 2013F.