Super Group

[investor101]

I like OldTown White Coffee. Which counter is it listed under? KL stock exchange?

The company end-year result announced. Here is the summary extracted. A 1-for-1 bonus share is awarded.

(not vested)
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 FY13 revenue increased 7% YoY to S$557.0m on the back of growth in Branded Consumer and Food Ingredients sales
 FY13 net profit up 25% YoY to S$103.4m
 Final dividend of 7.0 SG cents per share, increasing total dividend for the year to 9.0 SG cents per share, an increase of 27% YoY
 The Company is proposing to undertake a bonus issue on the basis of 1 bonus share for every 1 existing share in the capital of the Company held by the shareholders

Ref: http://infopub.sgx.com/FileOpen/Super_Gr...eID=275751

Stripping out the other income gains (non recurring), operating profit is actually down 7.2% year on year. Selling and distribution expenses had been rising for the past few quarters on higher marketing and promotional costs. Revenue growth had almost stalled for 2 straight quarters.

I had been seeing Super's white coffee on promotional offers for the past few months to compete with the promotions by Nestle and Oldtown. That's probably why the above costs are persistently high and which may become a norm.

(Not vested and don't intend to vest)

The higher marketing and promotional costs were due to its rebranding activities with a new logo and packagings. The increased costs might not be persistent.

(not vested)

Every week, I will make it a point to check the instant coffee shelves in NTUC Fair Price. I'm vested in Oldtown plus I'm a coffee drinker. For the past 2-3 quarters, Super's white coffee products had been on promotional offer. It started with buy 2 get 1 free (for about $12+) when they launched their new logo and packagings. Later the offer was retracted for 1-2 months, before they launched the buy 2 for $10+ offer. OldTown and Nestle joined in the price war when they also launched the buy 2 for $10+ offer. Just last week, Super had re-launched the buy 2 get 1 free offer for $12+ again to boost sales. Ah Huat has just joined the price war with a $9.95 for 2 pack offer. I expect the price war to persist for some time as the major brands fight for market share. And with coffee and sugar prices on rising trend, Super will be coping with higher COGS and higher expenses for the next few quarters.

I used to be vested in Super but had exited about 6 mths back as the company was not able to grow their branded business at double digit growth rate and their raw materials biz growth engine was faltering. Their recent performance no longer justify the 20x PE they used to command. There are more headwinds for Super than tail winds. I'm vested in Oldtown, which had grown their FMCG biz more than 20% in 2013 (where Super only grew theirs by less than 10%).

And Oldtown had penetrated the Thailand market, which is Super's stronghold. It had also penetrated the Greater Asia markets of Taiwan, HK and China. All these were achieved in 2013.