Super Group

Super Group: On the release of its 2Q13 results, OSK DMG maintain NEUTRAL, lowers TP to $4.58 due to higher WACC. Super Group’s overall revenue rose 23% y-o-y to $138m. Branded consumer (BC) sales gained 10% y-o-y to $92m on double-digit growth in Myanmar, the Philippines and Thailand. Food ingredient (FI) surged by 65% to $46m as sales to South-East Asia tripled to $32m, mitigating a 17% dip in contribution from East Asia. 2Q13 gross profit margin widened to 38.8% on lower raw material prices and higher operating efficiency. Coffee, sugar and palm oil input costs per tonne in 2Q13 were estimated at USD2,000, USD530 and USD700 (2Q12: USD1,940, USD620 and USD1,000) respectively. OSK DMG note that 2Q13 gross profit margins at the BC and FI divisions stood at 40-45% and 25-30% respectively. Given the recent increase in interest rates, its WACC -now a higher 4.5% (from 3.7% previously) – leads to a lower TP of $4.58 (vs $4.88 previously). OSK DMG believe a better debt-equity structure to facilitate a higher dividend payout or earnings accretion from potential M&As may warrant a higher valuation.