LEADING SOUTHEAST ASIAN 3-in-1 instant coffeemix maker Super, in its recent investor meeting, provided insights into its corporate developments in the recent quarter:
* Bumper dividend after disposal of property investments
Super had an extraordinary gain of S$10 million when it sold its entire 37.5% stake in Care Property for S$20.3 million. It declared an interim tax-exempt dividend of 1.8 Singapore cents per share for the first half ended Jun 2010, triple the amount for 1H09.
It intends to pay at least 50% of its 2010 earnings as dividends.
* More capacity for wholesale ingredients
It started constructing a new non-diary creamer production line in Mar, in anticipation of demand from China and Taiwan. The new facility begins operations in Sep, and will increase capacity by 50% to 75,000 tons a year.
* Celebrity endorsement
It engaged renowned Singapore celebrity singer JJ Lin as brand ambassador for its range of Super 3-in-1 flagship products’ advertising and promotions in Singapore and Malaysia.
An ad campaign was launched on 6 Aug in Singapore and Malaysia via television, radio, roadshows, contests and exclusive sale of concert tickets via related Super products promotions.
* Launch of organic soy milk product
Concurrent with JJ Lin’s brand endorsement, Super launched its new product --- 100% organic Super Soy Milk.
This will be retailed in most supermarkets and retail outlets in Singapore and Malaysia. This 100% organic bean product targets the health conscious, is calcium and protein enriched, low in sugar, and naturally free of cholesterol.
Super devotes about $1.5 million annually to research development and quality control and announced last month that it won AVA’s food safety gold award, conferred to 24 food producers in Singapore for maintaining “A” grading for food safety and quality for 15 consecutive years.
Super’s business development manager, Darren Teo, and group financial controller, Koh Chun Yuan, addressed the following investor questions at the meeting:
Business development manager, Darren Teo (left) and financial controller, Koh Chun Yuan.
Q: Will there be any more divestment of non-core assets?
We still have one JV property site in Cangzhou, China with 13 blocks of condominiums, which we carry at about S$7 million on our books. Six blocks have been sold.
None of this is recognized yet. In China, real estate has to be handed over to buyers before revenue can be recognized. We believe it will take another 2 to 3 years to complete the entire project.
Q: Are you able to ramp up capacity during the off-peak periods so that you don’t have to spend more on extra plant, property and equipment?
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Yes, we definitely do this. Many of our products have a relatively long shelf life of 2 years.
Q: How will the engagement of JJ Lin impact your A&P expense?
We don’t foresee that this will have a huge impact on our A&P expense ratio, which fluctuates from 10% to 14% each year.
Just last year alone, our selling and distribution expenses amounted to S$36.5 million (12% of top line) and this is not a small amount.
Furthermore, we expect group revenues to grow steadily each year.
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