SuperGroup

SuperGroup: Maybank-KE downgrade Super to Hold with $3.72 TP, as the house postulates that the group’s near-term outlook does not justify current valuations. The house expects several headwinds to curb earnings growth going forward; highlighting a rather mixed outlook in most of Super’s core markets. Despite improved sales in Myanmar during 4Q13, after Super reduced prices to its local JV partners, the house believes growth is likely to remain muted without significant increases in per capita income. Furthermore, the on-going political standoff in Thailand is expected to weight on growth, at a time when margins are under threat from increasing raw material prices since the beginning of the year. Outside of its core markets of Thailand, Myanmar, Malaysia and Singapore, Super continues to grapple with growth challenges. In the Philippines, the group is experiencing a setback after a strong start to 2013, with revenue contracting by 40% y/y in 4Q13, as new coffee flavours were outsold by more innovative competitors. Meanwhile, the group has been unable to make a major breakthrough in Indonesia so far. Going forward, management has lowered its growth target in the branded consumer segment from 10-15% to 5-10%, signalling intensifying competition in existing markets. At current price, Super trades at 25.8x FY13 P/E and remains in a net-cash position of $98.5m.