Maybank-Kim Eng upgrades Super Group to Buy from Hold, saying it sees evidence its branded consumer products’ sale growth will be better than expected. “This is a testament to Super’s defensible market share and the potential of a fast-growing Asean consumption market.”
It expects 12%-15% sales CAGR over the next three years, adding an early-2013 rebranding exercise may provide an immediate tangible sales uplift. Maybank-KE adds, “given its position as a market leader across fast-growing Asean markets, with a fully-integrated model from manufacturing to distribution, we believe Super may become an attractive M&A target for other F&B players.”
It notes Yeo Hiap Seng’s restructuring may lead to a sale of its 12% Super stake; “This may attract strategic investors or even trigger a possible tussle for control down the road.” It raises its target to $2.85 from $1.95, based on 20x FY13 PER, after increasing FY12-14 estimates by 10%-12%, adding it expects heightened F&B segment M&A interest to provide a re-rating catalyst above the historical PER range.
Recent segment M&A transactions have been between 20x-35x PER, it notes. The stock is up 2.5% at $2.06.
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