Supreme Share Discussion Threads

[slopsjon2] 18/7/2023 10:42

It's whack-a-mole time for AIM shares, AIM all share down 43%, continuing its sideways trend for the last 20 years.

[podgyted] 17/7/2023 20:18

The impact revolves around the new distribution contract - my understanding is SUP is very low on disposables apart from this.

From 121p to 100p would take close to £26m off the MV of SUP. That seems unlikely given that we don't even know if the disposable ban will happen.

Just my opinion - but like you I think the current market is just a tad insane.

[johndoe23] 17/7/2023 20:05

I agree but this market moves in mysterious ways

[podgyted] 17/7/2023 19:35

Well that would be extremely harsh!

[johndoe23] 17/7/2023 18:13

Expected drop today on weekends news. Seems a bit harsh, could 100p be tested again though?

[johndoe23] 14/7/2023 14:37

2025 forecast on stocko is 13.8p

[missmimz] 14/7/2023 14:16

Stockopedia have EPS (24) from 10.505 to 12.775 and EPS (25) 11.66 to 13.795

[ali47fish] 14/7/2023 13:58

john which broker upgrade is it- and 13.8 eps compared with what please

[johndoe23] 14/7/2023 13:39

Yep earnings upgrade to 13.8p. Share price 140p at least

[someuwin] 14/7/2023 12:36

Adding here - looks good

[taursus] 08/7/2023 18:39

It is not a question of errors but of different assumptions. No is the answer to your question.

[ali47fish] 08/7/2023 13:52

taursus have you emialed or spoken to if therare any errors

[taursus] 08/7/2023 11:57

Forecasts

If one thing is clear about Supreme, it is that the numbers from Equity Developments are not very helpful. On April 17th, ED published a note, following Supreme’s RNS of the same date stating that adjusted EBITA for FY23 would be at least £19.3m, forecasting fully diluted adjusted eps for FY23 of 9.4p. The actual number for fully diluted adjusted eps, published this week, was 11.2p. ED’s numbers were therefore out by nearly 20%, even when given the adjusted EBITDA number.

Likewise, ED’s adjusted fully diluted eps numbers for FY24 and FY25 are not very helpful.

If ED’s numbers for FY24 (and FY25) are adjusted for a few assumptions, a radically different forecast for fully diluted adjusted eps is arrived at.

First, ED has Vaping sales for FY24 rising from £76m to £84m. This £8m increase looks light. A full year of Liberty Flights will add at least £2m, a full year of Cuts Ice, allowing for the sale of the T-Juice brand, a further £1m, and the recent Superdragon acquisition perhaps £3m. That makes £6m.

If the run rate of H2 FY23 Vaping sales (excluding acquisitions) is applied to H1 FY2024 that would add a further £8m v. H1 FY2023. That would make a total increase of £14m. If a 7.5% increase is then applied to H2 FY23 Vaping sales (excluding acquisitions) that would give roughly a further £3m increase in FY24, making £17m in total, £9m more than ED’s numbers.

If it is assumed, to be conservative, that the Vaping gross margin in FY 24 is 38% rather than 40% assumed by ED, the increase of £9m in Vaping sales, net of the lower assumed GP%, would give an extra £1.7m in PBT.

Second, using information given on this week’s call, then operating expenses for FY24, excluding any adjusted items, depreciation, and amortisation, should be the corresponding FY23 total of £21.5m (£28.2m total FY23 “Administration expenses” less £2.2m of depreciation, less £0.9m of amortisation, less £1.1m of fair value losses on forward contracts, less share-based payments of £1.46m, less acquisition costs of £1.0m), adjusted for:

1. Inflation of, say, £1m.
2. An increase in sales-related expenses of, say, £1m.
3. £1m of extra expenses relating to the Elf Bars deal. (The ED forecasts have an extra £3m of GP from this deal; to get to the guided £2m of additional EBITDA, £1m of extra opex needs to be included.)
4. £3.5m of opex was incurred in FY23 in respect of acquisitions, now fully integrated from the beginning of July 2023 at the latest. If £2m of these expenses can be saved (and savings on the £3.5m were plainly stated on the call), then that would give net additional opex of £1m for FY 2024 (ie, £22.5m).

The corresponding number in the ED forecast Is £26.5m (Opex of £33.3m per ED report less £2.5m of adjusted items, less £2.8m of depreciation and less £1.5m of amortisation). That is a difference of £4m.

The total additional PBT is therefore £5.7m, which would take ED’s adjusted PBT from £20.3m to £26m. If an adjustment is then made for amortisation of acquired intangibles (this will total £1.615m in FY24, before allowing for any more acquisitions), which Supreme does in presenting its fully diluted adjusted EPS, this gives fully diluted adjusted eps of 17p for FY24, 33% more than ED’s number of 12.8p.

The corresponding number for FY25 is around 20p, if modest sales growth of 5% is assumed in sales, a continued recovery in lighting and a full year’s contribution from the Elf Bars distribution deal (and an EBITDA contribution of £3m as hinted at on the call).

On top of this, now that Supreme has huge financial and logistical flexibility and capacity, acquisitions from distressed sellers could easily (and conservatively) add a further 1-2p of earnings in FY24 and a further 2-4p of earnings in FY25. They could all be fully integrated from day one, with little to no increase in costs below the GP line.

[boonboon] 07/7/2023 16:35

Investor presentation hTtps://youtu.be/xH3QrSce0-Y

[tole] 06/7/2023 07:54

https://citywire.com/funds-insider/news/expert-view-fuller-s-supreme-vistry-ao-keller/Berenberg: Supreme building up firepowerWholesaler Supreme (SUP) is not only providing a strong performance within its existing business, but it has plenty of scope for new acquisitions, says Berenberg.Analyst Michael Benedict reiterated his 'buy' recommendation and increased the target price from 170p to 190p on the stock, which climbed 6.7%, or 7p, to 11.5p yesterday. Full-year 2023 results were largely in line and the key focus was instead the outlook for 2024, which Benedict said 'has certainly not disappointed, with a combination of strong performance in the existing business, alongside a sizeable new vaping distribution contract, both contributing to meaningful upgrades to our estimates'.On top of this, a 'core attraction of Supreme is its ability to leverage customer relationships to scale bolt-on acquisitions'.'The company has ended full-year 2023 in a strong balance sheet position, which should provide plenty of firepower for more earnings-enhancing acquisitions in the coming periods,' said Benedict.

[edmonda] 06/7/2023 07:43

Detailed new research report (and reminder of the investor presentation this morning at 11am with Supreme management, sign up here:

"Strong FY23 results backed by vaping acquisitions"

For the year to 31 March 23, Supreme reported revenue of £155.6m, +19%YoY (with H2 revenue rebounding 27%YoY versus H1 +6%YoY), and (adj.) EBITDA of £19.4m, -8%YoY (compared to H1 -19%YoY). Revenue was ahead of our estimate of £150m; (adj.) EBITDA matched our outlook. The Vaping product segment recorded revenue of £76.1m +75%YoY, 49% of total, with 40% of incremental revenue (c.£13m) generated by the acquired Liberty Flights, Cuts Ice and Flavour Core operations. Even excluding the contribution from acquisitions, we estimate that growth was an impressive 45%YoY. Batteries revenue grew 13%YoY to £39.5m, 25% of total. Lighting revenue declined 43%YoY (£15.4m) due to customer overstocking issues, but H2 recovered 50% on H1. Sports Nutrition & Wellness revenue grew 5%YoY (£16.8m), and the Branded Household Goods & Other segment contributed £7.8m of revenue (-17%YoY).

As of 31 March, the Group was (pre-IFRS 16) cash positive (£3.2m), having generated £19.3m in (net) cash from operations, in addition to which the disposal of TJuice yielded £4.0m. £30m in borrowing facilities offers the potential to grasp further suitable M&A opportunities. Consistent with Group policy of a 25% of net profit dividend policy, a dividend of 3p/share is payable for the year.

Supreme has announced a master distributor agreement in the UK for the popular Elf Bar and Lost Mary (QM600) range of disposable vapes across its retail network; we estimate that in FY24 this could add c.£25m in additional revenue and c.£2.0m in (adj.) EBITDA. The brands are owned by Shenzhen iMiracle Technology Co. Ltd., in China, and are some of the most popular disposable vape brands in the US (e.g. the Elf Bar BC5000).

Reflecting the potential impact of the Elf Bar distributor agreement, we have raised our FY24 revenue outlook by 20% to £194.5m, and (adj.) EBITDA outlook by 19% to £25.6m. Our Fair Value increases to 200p/share, indicative of a FY24 EV/EBITDA of 8.7x.

Link to report & audio summary:

[llama_investor] 05/7/2023 10:50

Agreed Doug, and I think my use of the language "dumpers" was slack. My point remains, but I could have phrased it better. Hope this investment here works out well for the both of us. Cheers.

[dougmachin] 05/7/2023 10:09

A lot of the big sells though are paired trades, happening at exactly the same time and amounts.

I think this is different from folk dumping stock on the open market. I think this is a sell and a direct buy, not just throwing sells at the MMs.