Wednesday, May 14, 2014

Super Group - A Home Grown Company Getting Shorted

Super Group dropped about 8-9% on 14 May 2014. They released their financial statements on  12 May 2014 and frankly, it wasn't a very bad set of results. Revenue decreased 6% and profit reduced 19% and dividends were XD on 9 May 2014. This drastic plunge in price perked my attention, especially when i do enjoy their products such as their Super Charcoal Roasted White Coffee.

I looked at their dividend policy and it looks good, with the Super Group management committing at least 50% of net profits to shareholders and furthermore, the recent $0.07 dividend is higher than the previous same period amount of $0.051 which could possibly point to a higher annual dividend this year than last year. 

Yearly revenue, net profit and dividends has been steadily increasing and gross margin is about 38%. This company has very low debt-to-equity ratio and with $94.7 m in cash, it is able to nearly fully repay all its liabilities (current and long term)  of $99.6m so why the steep plunge in price in just one day?
Could it be a Muddy Waters kind of event ?
Looking at the  daily short sell report, my questions were answered. Yes there indeed are people shorting this company. RSI chart shows a very deep selling. AND SHARES SHORTED MUST BE BOUGHT BACK EVENTUALLY.
If this was a S-share, i would think there is a very high chance that something scandalous has happened and the risk for me is just too great. Given that Super Group is a Singapore- based company with most of its higher management residing in Singapore and that i do actually like their products and most importantly, i do see with my own eyes their products being sold in all supermarkets and them venturing into the cafe business at Bedok Point, Republic Plaza and Star Vista, under the brand name Owl, i bought into their shares, my virgin ownership @ $2.95, giving me a dividend yield of about 3.05% ( based on last year's annual dividend amount of $0.07). It's 52 week high was $5.05 btw.
Hope i will be 'ji' happy like this viral marketing video by OWL-Super Group. Let's Support Home Grown Singapore Companies!

1 comment:

  1. All the best for holding Super group. The stock is trading at 18.5x P/E if we exclude last yr's one time gain in selling its subsidiary. Thus it is likely, this yr's dividend will be a 2.7% yield.


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