Super Group

Super Group: Maybank-KE reiterates Buy with TP $6.00, implying 28.3x FY14e P/E. China branded consumer sales currently make up less than 5% of Super’s total revenue (largely through instant cereal), but this segment has the potential to become a significant contributor over the next 2-3 yrs. Super recently expanded its product offering in China, with the launch of its coffee products in Aug, endorsed by famous Chinese actress and singer Wang Luodan. In the accompanying trade, more than 1000 regional distributors turned up, and sales orders and reception were “very positive”. While China is still predominantly a tea-drinking country, coffee consumption has been picking up, driven mainly by a younger audience influenced by the Starbucks culture and patient marketing by Nestle. The coffee segment is expected to grow at a healthy 12% clip on average over the next five years, and the time is ripe for Super to capitalize on this expected growth without overinvesting.