Super Group: DBSV has maintained its HOLD rating on Super Group but reduced its TP from $1.45 to $1.25, pegged to a lower 20x FY16F PE, in line with its average valuation over the last 4 years. The house believes that earnings recovery momentum will be back-end loaded beyond 2H15F. Even though management is lining up new products for launch over this period, regional consumer sentiment remains tepid and thus the house believes recovery will be slow and of a gradual pace.
DBSV has cautioned that the expectations of an occurrence of El Nino this year could cause a surge in commodity prices and impinge on margins in FY16. However, currently Super is expected to enjoy benefits of lower coffee bean prices which bottomed out at US$1700/mt, and should aid margins in 2H15.
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