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The Three Numbers That Supersize Super Group

Ser Jing - Super Group First Quarter Results, Strong Brew of Profit (pic)When you call your company “super”, you have to make sure that it lives up to its name. In the case of Super Group (SGX: S10), which makes instant beverages, it has.

Super Group is the brainchild of David Teo who believed that busy Singaporeans would appreciate a quicker way of getting their daily caffeine-fix. From a standing start in 1987, the company has brewed itself into a $1.6b beverage company.

Super Group also boasts one of the highest Return on Equity (RoE) in the Singapore market. While the average RoE for the 30 companies that make up the Straits Times Index (SGX: ^STI) is around 10.5%, Super Group’s is 21%.

A RoE of 21% would suggest that shareholders are reaping almost $21 in profit for every $100 invested in the company.

One reason for the company’s impressive RoE stems from its high Net Income Margin. Super Group makes around $18 of bottom-line profit for every $100 of revenue it generates. Its Net Income Margin compares well with Yeo Hiap Seng (SGX: Y03), which makes $17 for every $100 of sales.

Super Group also uses its assets efficiently. Its Asset Turnover of 0.97 implies that it generates $1 of sales for every dollar of asset employed in the business. That is nearly twice that of Singapore companies. What’s more, the company is not highly leveraged. Its Leverage Ratio of 1.2 is lower than the average of 1.7 for the Singapore market.

By unpacking Super Group’s Return on Equity it is easy to see why the company is so full of beans. Its RoE of 21% is the product of a robust Net Income Margin of 18%; an efficient Asset Turnover of 0.97 and a low Leverage Ratio of 1.2.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.