Super Group’s shaky recovery under threat from intensifying Malaysia woes

The new goods and services tax might pinch margins.

Super Group’s slow recovery might get derailed by potholes in Malaysia, a report by Maybank Kim Eng revealed today.

The group is facing a conundrum brought about by Malaysia’s goods and services tax (GST), which will be effective starting April 2015.

“Super fears that if it raises prices to pass on the GST and its competitors do not, there may be a consumer backlash. But if it does not, margins could be pinched. Moreover, the MYR has been exceptionally weak against SGD, down 8% since Sep 2014. Malaysia forms 10% of total sales, including food ingredients,” stated Maybank Kim Eng.

The report added that while Super is on its way to a recovery in almost all its major markets in 2015, a tepid FY14 is already anticipated with fourth quarter net profit expected to plunge 23%.