Can Super Group go back to its glory days?

Share price has soared 35% since its 4Q15 results.

Super Group is on the path to recovery, but it is not roaring like the old days.

According to a report by CIMB, Super’s share price has soared 35% since its Q4 results showed signs of an earnings growth turnaround.

“In the past month, Super has gone from a deep-value play, trading at a discount to the smaller instant coffee pure play (Old Town), to one that trades slightly above consumer peers’ average valuations,” CIMB asserts.

However, with share price having re-rated to 20x/18x CY16/17 P/E, it’s likely that most of the positives have been priced in.

Moreover, Super has had a torrid time in 2014 to 2015 as ASEAN consumer markets crumbled, and the company is only now finding its feet. A return to topline growth rates of 18-25%, as in 2010 to 2013, looks unlikely in 2016 to 2017.

Meanwhile, Super’s Q4 overall branded consumer (BC) sales (-1% YoY) stabilised but headline sales masked uneven growth across BC markets.

Thailand and China, which are Super’s largest and fourth largest market, performed well with double-digit Q4 sales growth YoY. This offset the sales decline in Myanmar (second largest market with sales growth of -7% to -9% in 4Q15) and double-digit contraction in the Philippines.

CIMB is also wary of disappointment as seasonal effects taper off given that Thailand and China are highly seasonal markets, with Q4 to Q1 typically strong.