Super Group Sees 19% Full-Year Profit Growth on Acquisitions

Super Group Ltd., South Africa’s top- performing stock, forecast fiscal-year profit growth will match the 19 percent first-half increase as the transportation company accelerates its recovery from near collapse five years ago.

Sales climbed 16 percent in the six months through December to 5.4 billion rand ($595 million), while per-share profit before one-time items rose to 95.3 cents from 79.8 cents, Super Group said Feb. 12. Revenue and profit growth “should be sustained for the full year,” Chief Executive Officer Peter Mountford said by phone from Johannesburg yesterday.

Growth will be boosted by acquisitions and bolstering existing businesses, he said. The company owns the largest fleet of leased vehicles in Australia and owns 28 South African motor dealerships. In 2008, Super Group halted dividends, sold property and issued 510 million rand of stock to shareholders to repay debt. A year later it had to raise 1.2 billion rand in a rights offer to stave off collapse after takeover talks failed.

“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.

Top Performer

Super Group is increasing supply-chain management operations, where it has a 5 percent share of the South African market, Mountford said. Sales at the company’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 stock gained 46 percent this year through yesterday’s close, outpacing the other 165 members on the FTSE/JSE Africa All-Share Index, which has added 1.5 percent over the period. Super Group, which reached a 4 1/2-year high of 25.25 rand on April 2, gained less than 0.1 percent to 24.56 rand at the 5 p.m. close of trading in Johannesburg, giving the company a market value of 7.7 billion rand. Super Group is trading at a price to earnings ratio of 12.5 versus 17.6 for the index.

The company will continue with share buybacks, a policy which is reassessed every year including the current fiscal year, Mountford said. Super Group has bought back almost 37 million shares since 2010, bringing down shares in issue to 289.3 million.

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