Professional Documents
Culture Documents
Research Team
Morning Bulletin
Stephanie WONG
Head of Research
swong@kimeng.com Top Idea
+65 6432 1451
Gregory YAP
Consumer
gyap@kimeng.com Super Group (SUPER SP) – Attractive dividends; maintain BUY
+65 6432 1450 Excluding a disposal gain of $10m, Super’s 2Q10 net profit fell by
Rohan SUPPIAH
6% yoy to $8.9m. While revenue grew 9% across all business
rohan@kimeng.com segments and gross margins improved, 2Q net profit was eroded
+65 6432 1455 by a $2.5m doubtful debt provision. Core operations performed
Pauline LEE
within our expectations. The interim dividend of 1.8 cents per
paulinelee@kimeng.com share and the group’s commitment to a 50% dividend payout are
+65 6432 1453 pleasant surprises. Maintain BUY.
Wilson LIEW
wilsonliew@kimeng.com
+65 6432 1454
Market Talk
Anni KUM
annikum@kimeng.com
Asia Pacific Breweries (APB SP) – Strong organic growth and
+65 6432 1470
contributions from its recently acquired businesses in Indonesia and New
James KOH Caledonia enabled Asia Pacific Breweries (APB) to boost its third‐quarter
jameskoh@kimeng.com
profit for the three months to end‐June by 90% to $77.5m. This came on
+65 6432 1431
the back of a topline revenue gain of 35.4% to $629.3m, from $464.8m a
Eric ONG year earlier. The latest results lifted earnings for the nine months to
ericong@kimeng.com
$212.2m, up 61% from $131.7m a year earlier. The company's
+65 6432 1857
acquisition of controlling stakes in PT Multi Bintang Indonesia and
Grande Brasserie de Caledonie in New Caledonia were completed on Feb
10. With the consolidation of their results, these two companies
contributed $28m to APB's pre‐tax profit in the April‐June quarter.
(Source: Company, SGX, Business Times, Dow Jones)
THAILAND
SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS
Co. Reg No: 198700034E
MICA (P) : 090/11/2009
Morning Bulletin 12 August 2010
Consumer Analyst: Pauline LEE
Super Group (SUPER SP) – Attractive dividends; maintain BUY
What’s New
Excluding a disposal gain of $10m, Super’s 2Q10 net profit fell by 6%
yoy to $8.9m. While revenue grew 9% across all business segments
and gross margins improved, 2Q net profit was eroded by a $2.5m
doubtful debt provision. Core operations performed within our
expectations. The interim dividend of 1.8 cents per share and the
group’s commitment to a 50% dividend payout are pleasant
surprises. Maintain BUY.
Our View
Consumer goods sales remained a strong recurrent income, rising 11%
yoy and accounting for 90% of total revenue. Robust demand was
seen across Myanmar, Thailand, Mongolia and China. To reach out to
the younger consumers, Super has engaged renowned Singapore
singer JJ Lin as brand ambassador for its Super 3‐in‐1 flagship
products. Constant introduction of high‐variant products, such as the
Super Soy Milk, aids margin recovery.
Despite the 7% decline in ingredient sales, margin was resilient as
resources were channelled to higher profit margin contract
manufacturing business. We expect ingredient sales to accelerate in
2H as the new production line, which will double annual capacity,
starts operation in September. According to management, the new
capacity will be met by strong demand from China and Taiwan.
Super declared an interim dividend of 1.8 cents per share, thrice that
in 1H09. More positively, the group plans to commit to a 50% dividend
payout, in line with its cash‐generative business and positive outlook.
With the higher dividend payout, we believe much higher dividends
are in store in the future. We raise our FY10 DPS to 6 cents, translating
to a yield of 6.4%.
Action & Recommendation
We have trimmed our earnings estimates by 6% to reflect the doubtful
debt provision and higher taxes. Super now offers stable dividends with
growth upside from ingredient sales. Currently the cheapest branded
consumer stock and trading at near the trough of its PER cycle, the stock
stands out as a good BUY. Our SOTP‐based target price is raised to $1.37.
SINGAPORE EQUITY RESEARCH
Page 2
Morning Bulletin 12 August 2010
Consumer Analyst: Pauline LEE
BreadTalk (BREAD SP) – Disappointing 2H; downgrade to HOLD
Event
BreadTalk’s 2Q10 net profit of $2.3m (‐24% yoy, +218% qoq) missed
our expectations due to ongoing start‐up losses from the restaurant
segment and lower profit from the bakery business. Net profit for
1H10 only met 26% of our full‐year forecast. In view of the limited
upside to its share price after the strong rally in the past three
months, we downgrade our recommendation on the stock to HOLD.
Our View
A consistently double‐digit increase in revenue across all business
segments and geographies failed to translate to earnings growth for
BreadTalk. Profitability was crimped by start‐up losses from new
restaurant brands, such as Ramen Play and Carls Junior. The second
quarter also saw weakness in the bakery business as its bakery units
in Hong Kong and China posted less‐than‐satisfactory performance.
Though the group has stayed focussed on enhancing its operating
efficiency to achieve a net margin of 8% (currently 3.5%), it appears
that margins were improving slower than expected. The ongoing
expansion of its restaurants and food courts in China means start‐up
losses could linger for some time. And it could take another 6‐12
months before its new strategically‐located outlets at the Singapore
integrated resorts and two new food courts along Orchard Road turn
profitable.
The good news is that the group has continued to generate positive
operating cash flow in 2Q. Operating cash flow grew by 30% to
$10.8m, pushing net cash up to $29m from $27m.
Action & Recommendation
We slash our FY10 earnings estimates by 18% to factor in weaker bakery
margins and start‐up losses. Our target price is cut to $0.66 from $0.70,
cross‐referenced with our DCF valuation. Following the strong rally in
share price (+18%) in the past three months and in view of BreadTalk’s
recurring start‐up costs, we downgrade our rating on the stock to HOLD.
Year End Dec 31 2008 2009 2010F 2011F 2012F
Sales (S$ m) 212.2 246.5 273.0 297.6 324.7
Pre‐tax (S$ m) 12.0 15.6 12.8 15.9 18.8
Net profit (S$ m) 7.8 11.1 9.3 11.4 13.4
EPS (S cts) 3.3 4.7 3.3 4.0 4.7
EPS growth (%) 2.3 43.0 ‐30.6 22.7 17.8
PER (x) 17.5 12.3 17.7 14.4 12.2
EV/EBITDA (x) 3.9 2.8 3.2 2.5 1.9
Yield (%) 1.7 0.0 0.0 1.4 1.6
SINGAPORE EQUITY RESEARCH
Page 3
Morning Bulletin 12 August 2010
Results Calendar
Monday Tuesday Wednesday Thursday Friday
09‐Aug‐10 10‐Aug‐10 11‐Aug‐10 12‐Aug‐10 13‐Aug‐10
Company Period Company Period Company Period Company Period Company Period
NATIONAL DAY Brea dta l k 2Q Chi na 1H Al l green 1H ComfortDel gro 2Q
Mercha nts Properti es
Cha ngti a n 2Q CSE Gl oba l 1Q ARA As s et 2Q Del Monte 2Q
Pl a s ti c & Ma na gement Pa ci fi c
Chemi ca l
Fuxi ng Chi na 2Q Gol den Agri ‐ 1H Arms trong 2Q Hi a p Hoe 2Q
Group Res ources Indus tri a l
Ni ppecra ft 1H Hong Leong 2Q As i a Pa ci fi c 3Q Ho Bee 2Q
Fi na nce Breweri es Inves tment
UOB 2Q Hotel Roya l 2Q Bes t Worl d 2Q Hong Leong 2Q
Interna ti ona l As i a
HTL 2Q Ci ty 2Q IFS Ca pi ta l 2Q
Interna ti ona l Devel opments
Petra Foods 2Q Ci tys pri ng 1Q Li Heng 1H
Infra s tructure Chemi ca l Fi bre
Trus t
Del ong 2Q QAF 2Q
Hol di ngs
Ea s tern As i a 2Q SBS Tra ns i t 2Q
Technol ogy
Fra s er a nd 3Q SuperBowl 2Q
Nea ve
Frencken 2Q Swi ber 2Q
Group Hol di ngs
Indofood Agri 2Q Tel eChoi ce 2Q
Res ources Interna ti ona l
Ma cqua ri e 1H Wi l ma r 2Q
Interna ti ona l Interna ti ona l
Infra s tructure
Fund
Pa rkwa y 2Q
Hol di ngs
Q & M Denta l 1H
Sembcorp 1H
Indus tri es
Si ngTel 1Q
SMB Uni ted 1H
Vi com 2Q
16‐Aug‐10 17‐Aug‐10 18‐Aug‐10 19‐Aug‐10 20‐Aug‐10
Company Period Company Period Company Period Company Period Company Period
ASL Ma ri ne FY10
SINGAPORE EQUITY RESEARCH
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Morning Bulletin 12 August 2010
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Morning Bulletin 12 August 2010
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SINGAPORE EQUITY RESEARCH
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