Super Group Sees Steady Growth Amid Recovery From Near Collapse

Super Group Ltd. (SPG), the best performing stock in the FTSE/JSE Africa All-Share Index (JALSH) this year, forecast fiscal full-year profit growth will match that of the first half as the South African transport company recovers from near collapse five years ago.

Sales climbed 16 percent in the six months through December to 5.4 billion rand ($598 million), while per-share profit before one-time items, or headline earnings per share, rose 19 percent to 95.3 cents, Super Group said in a Feb. 12 statement. The company owns the largest fleet of leased vehicles in Australia, manages the storage and transportation of goods for clients such as Robert Bosch GmbH, the world’s biggest auto- parts supplier, and owns 28 South African motor dealerships.

“The type of revenue growth you saw at the half-year should be sustained for the full year and similarly we’d like to see headline earnings per-share growth similar to that reported at half-year,” Chief Executive Officer Peter Mountford said by phone from Johannesburg yesterday.

In 2008, Super Group halted dividends, disposed of property and sold 510 million rand of stock to existing shareholders to help repay debt that amounted to almost two-thirds of its equity. Larry Lipschitz, who led the company for 22 years, quit in April 2009 after a first-half loss. Five months later it was forced to raise 1.2 billion rand in another rights offer to stave off collapse after takeover talks failed.

The stock has gained 46 percent this year through yesterday’s close, outpacing the other 165 members on South Africa’s benchmark equity index, which increased 1.5 percent over the period. Super Group, which reached a 4 1/2-year high of 25.25 rand on April 2, fell 0.4 percent to 24.55 rand yesterday, giving the company a market value of 7.7 billion rand. Super Group is still cheaper than the benchmark, trading at a price to earnings ratio of 12.6 versus 17.4 for the index.

Buybacks Continue

The company will continue with share buybacks, Mountford said. Super Group has bought back almost 37 million shares since 2010, bringing down shares in issue to 289.3 million.

“That’s the more value-enhancing strategy for us,” he said. “We reassess it on an annual basis. That’s certainly going to be the case for this year to June 2013.”

Super Group is increasing its operations in supply-chain management, where it has a 5 percent share of the South African market, according to Mountford. Growth will be boosted by bolstering existing businesses and making acquisitions, he said. Auto sales from Super Group’s dealerships climbed 12 percent in the first half compared with an 8 percent gain in new vehicle sales in South Africa over the period, according to a slide on its website.

“The company’s turnaround story is almost complete,” Jean Pierre Verster, an analyst at Johannesburg-based 36One Asset Management, which owns Super Group stock, said by phone May 6. Super Group “has good prospects. The Australian fleet-lease division is performing well and will probably support sales and profit growth,” he said.

To contact the reporter on this story: Jaco Visser in Johannesburg at avisser3@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

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