Super Group shares bland on higher raw material prices and volatile forex

SINGAPORE (Oct 13): Daiwa Capital Markets is maintaining its “sell” call of instant coffee manufacturer Super Group with 65 cents target price on doubts of a recovery and lack of earnings visibility.

In a report published on Wednesday, analyst Jame Osman notes that while competitive pressures are easing, near-term headwinds such as unfavourable foreign currency movements and volatile raw material prices continue to bog down the stock.

While the company states while the pricing of branded products in its core markets is now more competitive, Osman notes that currency weakness, especially in Myanmar, continues to affect performance. In FY16, revenue from branded consumer segment is expected to drop 1.9% implying a stronger 2H16 as 1H16 saw a steeper 5.25% drop.

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