Super Group: In the recent NDR, the key takeaway was that Super has made its transition to a stronger growth platform.
In its transition, the instant-coffee maker has completed its rebranding efforts, tightened product range, launched more premium products with strong differentiation to boost margins, fixed distribution and logistics problems and identified new growth markets.
On growth, management is cautiously optimistic that 2015 will be a year of revenue and profitability recovery, albeit gradual. Meanwhile, normal seasonality can still be expected, with 2H15 to be stronger than 1H15.
Marketing activities will be stepped up in 2H15, where there will be a concerted push for new premium, differentiated products in all markets. Margins are also expected to improve, assuming input prices stay tame.
While there is a risk that growth forecasts are not spot-on, Maybank-KE reminds investors to focus on the bigger picture, i.e. a strong and continual recovery trend.
Maybank-KE maintains Buy on Super with TP of $1.60, based on 23x FY15e P/E, or 0.8x above its 5-year mean. The house opines its expectations are not too aggressive, notwithstanding possible weakness in Malaysia due to GST implementation and weakening MYR.
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