Super Retail Group operates a portfolio of well-known consumer brands (four iconic brands: Supercheap Auto, rebel, BCF and Macpac) with a strong omnichannel presence.
“We see it as a well-managed retailer with a high degree of operational efficiency that we believe has been enhanced over the course of the pandemic,” Raymond said.
“90% of items sold by Super Retail Group are priced below $100, making it less sensitive to a pullback in discretionary spend than others.”
“SRG has reported a strong profit performance for the first half of financial year 2024, with profit before tax (PBT) 14-16% above our forecast (15-17% above consensus) and sales in line with our forecast.
“Group PBT is expected to be $200-203 million (Morgans forecast $175 million consensus $173 million).
“Group sales were $2,020 million (Morgans $2,033 million, consensus $1,987 million). Like for like (LFL) sales growth was +1% (Morgans +2%, consensus -1%), with notable strength in Supercheap Auto and BCF.
“We believe the potential for expansion and improvement of the store network may be underappreciated.
“Super Retail Group pays an attractive dividend, and its trading multiples are far from demanding. “Our rating is ADD and our discounted cash flow (DCF) and enterprise value to earnings before interest and taxes (EV/EBIT) based target price is $17,” Raymond said.
Super Retail Group (SRG)
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