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Shares of Super Group Ltd Rise More than 14% in Two Days: The Good Story

Over the past two days, shares of Super Group Ltd (SGX: S10) have enjoyed a nice 14.2% increase in price from S$1.20 to S$1.37. This comes after the food and beverage outfit reported its fiscal fourth-quarter earnings last Friday.

Although an increase in share price is a welcome sight for shareholders, as Foolish investors, we should look at the business behind the ticker to understand if there is good reason for this optimism.

The Good

The business of Super Group can be divided into two segments: Branded Consumer (BC) products and Food Ingredients (FI). You can read more about Super Group here.

Super Group Product Graphs -1

Source: Super Group’s Earnings Report; Q4’14 denotes the fourth quarter of 2014.

The good news is that Super Group’s BC business segment’s revenue had growth in the recent fiscal fourth-quarter, up 6% from a year ago. Super Group’s management team sees the BC segment as the company’s main pillar for growth, therefore the increase is encouraging.

But let’s go a little deeper into the BC business segment.

Super Group BC Graph - 1

Source: Super Group’s Earnings Report

The BC business segment can be divided into further sub-segments of Cereal, Coffee (particularly instant coffee), and Others. From the chart above, you can see that Coffee makes up a major part of BC sales. Let’s also look at where the BC sales happens.

Super Group BC Graph - 2

Source: Super Group’s Earnings Report

Southeast Asia is by far the most important geography for the BC segment. Singapore, Malaysia, Myanmar, and Thailand are major revenue contributors for Super Group.

Taking the last two graphs we’ve seen together, we can note that the increase in revenue for the BC segment was down to growth in Southeast Asia as well as growth in the Coffee sub-segment.

Both dimensions – Southeast Asia and Coffee – are key revenue contributors for Super Group, so their growth are indeed encouraging developments.

Now, before you jump for joy – let’s also look at the flipside of the argument. Click here to see what to keep an eye on for Super Group.

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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 contributor Chin Hui Leong owns shares in Super Group.