Super Retail Group Ltd

SUL Details
 
Positive Sentiments: Super Retail Group Ltd (ASX: SUL) stock rose 2.5% on May 11, 2018 with rise in positive sentiments for the group across the market. Given the strength of the business, the market believes to see good upside in the stock price in near to medium term based on positive outlook for Australian consumers at the back of the recent federal budget and tax cuts.
 
Meanwhile, SUL provided a positive trading performance so far this financial year (first 17 weeks of H2 FY18) and the profit performance of the Group has been in line with the company’s expectations. Supercheap Auto is on track to hold full year EBIT margins in line with the prior comparative period. Rebel’s EBIT margins are tracking at 0.1% point below the prior comparative period and BCF’s EBIT margins are tracking at 1.0% point below the prior comparative period. Supercheap Auto is performing strongly due to its focus on customer experience, digital engagement and extension of services. However, BCF’s sales performance are affected by differing weather conditions across the country during February and March with like for like sales in New South Wales growing by 6.5% so far this half year while declining by 4.5% in Queensland. Rebel continues to build momentum as it integrates the former Amart Sports stores and optimises the ranging and inventory across all stores. Rebel business is on track to fully deliver the synergy benefits from integrating Amart Sports business into Rebel in FY19.
 
Moreover, SUL has completed the acquisition of Macpac in April 2018 and the business is expected to contribute circa $5 million to Group EBIT in the balance of the FY18. Additionally, based on current trading conditions, FY18 Group EBIT margin (excluding 3 months contribution from Macpac) is expected to be in line with the prior comparative period and the capital expenditure is expected to be of circa $100m.
 
Meanwhile, SUL stock has fallen 6.08% in past three months as on May 10, 2018 but rose by 11.88% in last one month, and is trading at a P/E of 15.29x. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $ 7.91.
 

Sales growth compared to prior comparative period (Source: Company Reports)

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