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Instant coffee firm's TDRs up sharply on debut

Instant coffee firm's TDRs up sharply on debut

Taiwan depository receipts (TDRs) of Super Group Ltd., the largest instant coffee firm in Southeast Asia, closed up sharply on its debut on the Taiwan Stock Exchange (TAIEX) Thursday due to its attractive low valuation, dealers said.
Super Group TDRs closed up 6.79 percent at NT$14.95 (US$0.47) on their first trading day on the TAIEX, with 50,000 shares changing hands, while the benchmark weighted index fell 0.20 percent to 7,835.54.
The company, founded in 1987 and known as Super Coffeemix Manufacturing until early May, has been listed on the Singapore stock exchange since 1998.
"Compared with other Taiwanese foodstuff stocks, Super Group is cheap, prompting investors here to place large buying orders on the stock, " Hua Nan Securities analyst Henry Miao said.
Its TDRs were traded on a price-per-share to earnings-per-share (PE) ratio of 10, much lower than the 15-20 multiple of Taiwanese food stocks, Miao said.
In addition, the overall PE ratio of the local bourse stood at 14 at the end of August, according to the TAIEX.
Miao said the low valuation of Super Group largely reflects low liquidity on the Singapore bourse, where institutional investors dominate the trade, in sharp contrast to the Taiwan market in which retail investors are more active.
"Investors here wanted to keep the stock, hoping the TDR price would catch up with its Taiwanese counterparts, " Miao said, adding that it is easier for the company to raise funds in Taiwan than in Singapore.
For the listing, Super Group issued 40 million TDRs, each of which represent 0.5 common shares, to raise NT$560 million for business expansion.
According to the TAIEX, the buying orders exceeded 10 million shares Thursday and Miao said the buying orders have paved the way for further gains over the next few trading sessions.
Super Group said a day earlier that it is planning to launch its products in Taiwan at the end of this year at the earliest through some flavor adjustments that are expected to appeal to Taiwanese consumers.
The company operates 12 manufacturing facilities in Singapore, Malaysia, China, Myanmar and Thailand, and has 10 brands and more than 300 products, including instant coffee mix, instant coffee, instant tea mix, instant cereals, instant noodles and non-dairy creamers.
It also has a distribution network covering 52 countries worldwide.
In 2009, Super Group posted S$40.45 million (US$30.08 million) in net profits, up 55 percent from the previous year.