Super Group

[Muser]

What can go wrong with this business?

- consumption driven branded FMCG biz, and supported by fast growing food ingredients biz and new products in the pipeline.
- Sustained ROE, sales & profit growth over past 5 years
- Investing in building brands to differentiate, and improve pricing power

I estimate its IV is much higher than its CMP of $1.42

Why can't this be the Nestle of ASEAN?

Hi Muser,

No doubt it can be the NESTLE of asean.

However, one must consider the following:

1) Super will be earning approx 6.5 cent EPS this FY
2) The latest FY will no include any one time earning, no more amortization gain of sale and lease buyback of property, sale of subsidiary, food ingredient tremendous sales has stopped and is now growing at stable level. Therefore, it is likely to be a good reference of Super's group underlying business performance
3) Asean is a growing economy, however at 22x PE, is the future growth already priced in to the current market price

- My estimate of Super's earnings power value based only on operating profits (not considering any other one time income) is much more than CMP.
- For a growing franchise like Super, future returns may come from earnings growth, not expansion of PE multiple.
- So a current high PE may not matter. We have to pay up for quality...many value investors have profited by doing this.

My concerns are 1. How well can Super grow its brands, differentiate itself and gain pricing power. 2. How well can Super compete with Nestle & other big brands.