Supreme Share Discussion Threads

[actscap] 12/4/2022 14:15

Stock futures jump after CPI report on hope inflation is peaking, Nasdaq-100 futures gain 1.6%https://www.cnbc.com/2022/04/11/stock-market-futures-open-to-close-news.html

[gopher] 12/4/2022 14:00

A downgrade to sell side broker forecasts but still growing the business so not worried as a holder. Good entry point maybe as not on a particularly aggressive PE multiple in the first place.

[robbnw] 12/4/2022 12:52

Totally agree The business in the hands of Sandy Chadha will profit for 100% certainly Buying opportunity i say

[dougmachin] 12/4/2022 11:27

Worth re-watching:
hXXps://www.equitydevelopment.co.uk/research/supreme-plc-investor-presentation-dec2021

Segment breakdown for revenue/gross profit 22 minutes in.

Sports Nutrition is also vitamins. They manufacture their own powders (more types than whey powder only) and even sell them to other private label retailers (26 minutes in).

Ref. wage and transport costs, that's surely the norm now for all businesses. It's how mgt deal with this. Quality mgt here IMO, not just Sandy, but he speaks highly of the other managers. This is how they will deal with it:

"and will also be continually reviewing potential price increases and ongoing manufacturing and distribution rationalisation".

Another massive AIM over-reaction today IMO. I re-bought (sub 156p) the ones I sold at 228p. GLA.

[edmonda] 12/4/2022 10:37

New research note - full link here:

In a Trading Update for the year to 31 March 2022, Supreme PLC reports that it expects revenue of above £130.0m and EBITDA (adjusted) of no less than £21.0m based on strong organic growth in its core segments, augmented by strategic acquisitions. The Group expects continued profitable growth in FY23 driven by demand for its Vaping division products, partially offset by commodity price inflation impacting Sports Nutrition & Wellness division.

• The update indicates FY22 performance in line with our forecasts; our revenue estimate of £130.0m is revised to £130.4m. We have revised EBITDA outlook from £21.5m to £21.2m to reflect the impact of commodity price inflation in the Sports Nutrition & Wellness segment (12.1% of FY22 estimated revenue). Vaping remains the mainstay of performance, where Supreme expects to report 10%YoY growth in FY22 (33.4% of ED estimated revenue: 52.8% of ED estimated gross contribution) backed by the addition of Sainsbury’s and Morrisons to its customer base. The Group highlights 2%YoY growth in the Batteries division (26.4% of FY22E revenue) and +5%YoY in Lighting (20.9% of FY22E revenue) with gross margin improvement.

• For FY23 Supreme highlights “double digit” growth prospects in its Vaping division. Despite FY22 growth in Sports Nutrition & Wellness revenue of over 130%YoY(E), profitability in this division was impacted by a combination of the increased price of whey and additional wage and transportation costs.

Changes to estimates and medium-term outlook

• We remain fundamentally positive for growth prospects in Supreme’s leading Vape division where we expect the contribution to gross earnings to have risen from 45.1% in FY20 to just under 60% by FY24, propelling an increase in total (pre-forex) gross margin from 28.0% to 30.5% over the period.

• Our positive outlook for Vaping offsets near-term pressure on the Sports Nutrition & Wellness segment so that our revenue outlook to FY24 is unchanged. Our FY23 EBITDA (adj.) outlook is £22.0m from £24.0m, an 8.2% reduction, and in FY24 6.6% lower, taking a conservative view on the medium-term trends in energy and commodity prices which have already impacted a broad range of sectors. Taking these factors into account we adjust our fair value to 230p/share.

[rivaldo] 12/4/2022 10:28

I'm not a holder, just a long-term observer, but it's not just Sports Nutrition & Wellness that's the problem - the RNS states in the outlook:

"However, this performance will be tempered by commodity price inflation within Sports Nutrition & Wellness and the increases in the overhead base relating to wage and transport costs."

[danb45] 12/4/2022 10:26

It's not a profit warning is it ? I'm not panic selling.

[rogash] 12/4/2022 10:23

Thanks slops, that seems a very small percentage considering the damage it has caused.

[topvest] 12/4/2022 10:04

The IPO price was 134p - be surprised if it drops below the 150ps, as nothing has changed. Group is continuing to deliver.

[slopsjon2] 12/4/2022 10:01

5.6% according to Sharepad.

[rogash] 12/4/2022 09:52

What percentage of their business is sports and wellbeing please?

[mcpaulas] 12/4/2022 09:37

Can it drop below IPO price.Looks very possible at the moment.

[topvest] 12/4/2022 09:24

So, its the slight downgrade in FY23 and FY24 impacting the share price. Not unexpected though given the macro headwinds.

[topvest] 12/4/2022 09:23

Equity Development have put this out:

"Changes to estimates and medium-term outlook

• We remain fundamentally positive for growth prospects in Supreme’s leading Vape division where we expect the contribution to gross earnings to have risen from 45.1% in FY20 to just under 60% by FY24, propelling an increase in total (pre-forex) gross margin from 28.0% to 30.5% over the period.

• Our positive outlook for Vaping offsets near-term pressure on the Sports Nutrition & Wellness segment so that our revenue outlook to FY24 is unchanged. Our FY23 EBITDA (adj.) outlook is £22.0m from £24.0m, an 8.2% reduction, and in FY24 6.6% lower, taking a conservative view on the medium-term trends in energy and commodity prices which have already impacted a broad range of sectors. Taking these factors into account we adjust our fair value to 230p/share."

[actscap] 12/4/2022 09:19

Couldn't agree more. Long term prospects unaltered here. External factors unfortunate but given the breadth of revenue sources and strength of 88vape brand, I have no doubts sup will emerge ahead of the pack coming through into 2023/2024.

[topvest] 12/4/2022 09:11

Yes, no surprises on the cost inflation front. Some retrace as they have tempered the next year expectation. Fantastic growth in the medium to long term though so there may be opportunities to add more this summer.

[actscap] 12/4/2022 08:36

Bit surprised by the reaction here. The update was entirely in line with what I was expecting. Commodity price inflation is not unexpected and transport costs will be across all industries. I fully expect supreme to continue to be profitable and make strategic bolt on acquisitions when the right opportunities arise. Sandy continues to do a fantastic job here imo.

[slogsweep] 12/4/2022 08:20

Market wasn't but they always expect miracles

[purplepelmets] 12/4/2022 07:40

only in regards to whey protein. All in, I expected raw material price increases across the board, but this did not happen. Very satisfied with todays results and update.

[boonboon] 12/4/2022 07:08

Slightly disappointing update with regards to the cost increases. Think it will drop today.Will be interesting to see what this does to the wellness market over the short to medium term. We have diversity so should be able to ride out cost increases. Pure play competition might struggle.

[pastybap] 20/3/2022 14:10

I could be wrong, but I dont recall it being an issue during the start of the pandemic when the whole of China pretty much locked down.

[topvest] 20/3/2022 11:45

Not sure. It does say this in the Annual Report:

7. Far East supply chain 
Battery and lighting products are principally
manufactured and/or sourced in markets
outside the UK, notably the Far East. There
are a variety of risks generally associated
with importing products from such regions.
Notably, a reduction in availability of
shipments and/or increases to shipping
prices could have a material and adverse
impact on the Group's business, revenue,
financial condition, profitability, results and/or
future operation.
Mitigating factors/actions
Supply from the Far East has become a
greater concern over the past 12 months as
a direct result of the COVID-19 pandemic.
Supreme employs dedicated staff who are
responsible for managing and forecasting
stock levels to ensure availability isn't
disrupted. More recently, Supreme has
begun extending its network of freight
forwarders and shipping agents to ensure
greater choice of securing containers in a
timely and cost-effective manner

I think all of this anti-China rhetoric is hysterical.

Nearly everything is made in China in the Western World. Any sanctions would cause mayhem everywhere and an enormous global recession.

China are also sensibly staying neutral whilst urging a cease to warfare.

[buywell3] 19/3/2022 22:24

What %age of their products come from Ch-ina one wonders ?

[km18] 11/3/2022 13:08

...from last year...

Supreme Plc issued a trading update this morning. Management remain confident in achieving expectations for the full year. Overall, group margins have been particularly strong with significant year-on-year growth in profitability. Whilst it is too early to draw conclusions about the full year, the Board is pleased with the performance of the Group and looks ahead with confidence. This sounds pretty optimistic and suggests there will be scope for an earnings beat in FY22. Top line revenues grew strongly between FY19 and FY21 and if the business becomes more progressively more profitable there should be some decent EPS growth ahead. Valuation is also reasonably attractive with forward PE ratio of 12 and PS ratio around 1.7. The balance sheet also looks pretty healthy. BUY....

...from WealthOracleAM

[topvest] 06/3/2022 19:05

Definitely a share to sit tight on or possibly add more in my view. Should bounce back strongly.