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SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

Co. Reg No: 198700034E

MICA (P) : 090/11/2009

Singapore | 12 August 2010

T H A I L A N D

Morning Bulletin

Research Team

Stephanie WONG

Head of Research

[email protected]

+65 6432 1451

Gregory YAP

[email protected]

+65 6432 1450

Rohan SUPPIAH

[email protected]

+65 6432

1455

Pauline LEE

[email protected]

+65 6432 1453

Wilson LIEW

[email protected]

+65 6432 1454

Anni KUM

[email protected]

+65 6432 1470

James KOH

[email protected]

+65 6432 1431

Eric ONG

[email protected]

+65 6432 1857

Top Idea

Consumer

Super Group (SUPER SP) – Attractive dividends; maintain BUY

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.

Market Talk

Asia Pacific Breweries (APB SP) – Strong organic growth and

contributions from its recently acquired businesses in Indonesia and New

Caledonia enabled Asia Pacific Breweries (APB) to boost its third‐quarter

profit for the three months to end‐June by 90% to $77.5m. This came on

the back of a topline revenue gain of 35.4% to $629.3m, from $464.8m a

year earlier. The latest results lifted earnings for the nine months to

$212.2m, up 61% from $131.7m a year earlier. The company's

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)

8/9/2019 100812 KE Daily


Morning Bulletin 12 August 2010

SINGAPORE EQUITY RESEARCH

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.

Year End Dec 2008 2009 2010F 2011F 2012F

Sales (S$ m) 300.2 296.3 339.6 364.4 391.2

Pre‐tax (S$ m) 27.5 42.8 70.9 63.1 68.5

Net profit (S$ m) 25.1 40.2 63.1 55.0 59.7

Core EPS* (cts) 4.6 7.5 9.5 10.1 11.0

Core EPS growth (%) ‐14.9 61.2 26.4 7.2 8.6

PER (x) – core 19.5 12.1 9.6 8.9 8.2

EV/EBITDA (x)

10.5

10.5

8.2

8.2

7.8

Yield (%) 1.8 2.9 6.4 5.6 6.1

*Core EPS for FY10 excludes non‐recurring divestment gains

8/9/2019 100812 KE Daily




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

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Results Calendar

Company Period Company Period Company Period Company Period Company Period

Brea dtal k 2Q Chi na

Merchants

1H Al lgre en

Properties

1H Co mfo rtDe l gro 2Q

Changtian

Plastic &

Chemical

2Q CSE Gl obal 1Q ARA Asset

Management

2Q Del Monte

Pacific

2Q

Fuxing China

Group

2Q Gol den Agri ‐

Resources

1H Arms tro ng

Industrial

2Q Hi ap Hoe 2Q

Ni ppecraft 1H Hong Leong

Finance

2Q As i a Pacific

Breweries

3Q Ho Be e

Investment

2Q

UOB 2Q Hotel Roya l 2Q Bes t World

International

2Q Hong Leong

Asia

2Q

HTL

International

2Q Ci ty

Developments

2Q IFS Capi tal 2Q

Petra Foods 2Q Ci tys pri ng

Infrastructure

Trust

1Q Li Heng

Chemical Fibre1H

Delong

Holdings

2Q QAF 2Q

Eastern Asia

Technology

2Q SBS Tra ns i t 2Q

Fraser an d

Neave

3Q SuperBowl 2Q

Frencken

Group

2Q Swi ber

Holdings

2Q

Indofood Agri

Resources

2Q Te l eCh oi ce

International

2Q

Macquarie

International

Infrastructure

Fund

1H Wi lmar

International

2Q

Parkway

Holdings

2Q

Q & M Dental 1H

Sembcorp

Industries

1H

Si ngTel 1Q

SMB Uni ted 1H

Vi com 2Q


ASL Ma ri ne FY10


El l i ps i z FY10 Ka ri n

Technology

FY10 Ki a n Ann

Engineering

FY10

NATIONAL DAY

09‐Aug‐10 10‐Aug‐10 11‐Aug‐10 12‐Aug‐10

20‐Aug‐10

27‐Aug‐10

13‐Aug‐10

23‐Aug‐10 24‐Aug‐10 25‐Aug‐10 26‐Aug‐10

16‐Aug‐10 17‐Aug‐10 18‐Aug‐10 19‐Aug‐10

Wednesday Thursday FridayMonday Tuesday

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