Thursday 28 Mar 2024
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SINGAPORE (March 2): Maybank Kim Eng has upgraded Super Group to "buy" from "hold" and raised its price target from $1.02 to $1.60, based on 23 times projected 2015 earnings.

"We believe lower market expectations, better growth potential, balance-sheet health and a seasoned management are all reasons to buy the stock now," Maybank Kim Eng analyst Gregory Yap wrote in a note today.

The final three months of 2014 marked the second quarter for which the instant coffee maker's financial results met market expectations, according to Yap, noting that revenue, margins and profits all rebounded from their troughs in 3Q2014.

"With the return of growth in its core markets, backed by growth in new markets China and Vietnam, we think its worst could be over."

Most of the risks Super faces - including the introduction of a goods and services tax in Malaysia from April and increased competition - could still hurt its margins, but they have already been priced in, he said.

Super's 4Q2014 growth momentum should continue in the quarters ahead as, among other things, the economy in Thailand and Myanmar's currency have stabilised, while sales in Malaysia are benefitting from the group's rebranding efforts, Yap said.

The stock was up 1.7% at $1.215 at 9:13am (0113 GMT).

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