Super Group

Super Group: 4Q13 net profit climbed 6% y/y to $22.6m, driven by better gross margins of 38% (+4ppts), FX gain and gain on disposal of leasehold land in China. Revenue came in flat at $153.3m, due mainly to lower food ingredients sales (-7%) as a result of lower sales in China after the restructuring of its distribution network, partially offset by higher branded consumer sales (+3%) which came on the back of higher sales into the Southeast Asia, China and Mongolia markets. For FY13, net profit of $99.9m (+26%) beat estimates by 22%, while topline of $557m (+7%) were at the lower end of consensus estimates. On outlook, management expects market conditions to remain competitive over the next 12 months, and anticipates raw material costs and currency fluctuations to impact the group’s operating performance. As such, the group will continue to build its brands, consolidate its product lines, innovate and add new product variants to better capture market share in Asian markets. Super Group has also embarked on cost saving initiatives, such as streamlining its distribution network in China, manufacturing of LGSS, as well as the upcoming production of botanical herbal extracts in Malaysia. Management declared a final dividend of 7¢, bringing full year payout to 9¢ (FY12: 7.1¢), implying a 2.4% yield. Separately, the group proposes a 1-for-1 bonus issue. Group’s balance sheet remains debt-free with cash of $98.5m. At $3.70, Super Group trades at a hefty 21.6x forward P/E compared to global peers at 16x. While valuations are not cheap, this can be justified by the group's consensus estimate of an average growth rate of 12% each year till 2016. The counter will resume trading at 2.15pm.