London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
New research note - full link to report here: https://www.equitydevelopment.co.uk/research/trading-update-growth-propelled-by-vaping
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.
Hello, what is your basis for reducing EBITDA estimates by 8% in 2023 and 6% in 2024? The trading update provided by the company is pretty limited
I'm not sure they are allowed to discuss their research notes Nkhatt. But they do give you the answer in their note: "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" (just over a 1% reduction of a growing forecast future profit..... Hmmm yeah that's a good reason the shares should cost 20% less today - NOT!!)
I've managed to top up at £1.56 just now. What the market hasn't appreciated here is cost inflation driving costs up and also wages up supports Supreme putting prices up to absorb those costs.... in other words the net impact on Supreme could be negligible beyond the "shoe leather" effect on managing the changing prices as well as any delays in passing on prices (e.g. any prices negotiated with customers for X period of time) i.e. the 1%
Supreme's products are more at the "value" (and defensive) end of the market so if anything any slow down (dare I even say the word recession) could drive much higher sales.... I'm a regular Sealions customer and have been impressed by their marketing and efficient customer service. The same vitamins are for sale at 4 or 5 times the price at Rip Off and Bear Hat! And it just gets better and better. Supreme's main "wellness" competitor is owned by a Russian Billionaire. https://www.theguardian.com/business/2017/jun/26/holland-barrett-sold-russian-billionaire-mikhail-fridman
Worth calling out 92% excellent versus 63% excellent:
https://uk.trustpilot.com/review/sealions.com
https://uk.trustpilot.com/review/www.hollandandbarrett.com
Pay triple and get the 2nd one for a penny!
Over 70% of shares in sticky hands, and the CEO Sandy Chadha alone holds over 50%. Wouldn't be surprised to see more director purchases come through taking advantage of this fall in sp.
"Mild profit warning" is the phrase used by one analyst today. But also ends with a thumbs up (Paul Scott).
Here's the line in the trading update that triggered today's fall:
" . . . 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 . . . "
Thing is, there isn't a company in any country, anywhere in the world today, that isn't facing that challenge, hence the 'mild profit warning'.
However, the pullback in the SP is anything but mild and is the full monty reaction to a traditional profit warning RNS.
Should the SP drop into the 140's, which I think could be the case, that would take it right back to the lowest SP ever - when SUP was floated back in early '21.
So will take the first bite if 140's float up on the screen. Why only a first bite and not go all-in?
1) The SP launched into a sustained retrace almost upon enterinmg 2022 by falling from mid-January consistently - and still hasn't ceased retracing. If this big drop today (which mirrors a traditional profit warning reaction by the market) then that means the SP could become moribund for a full year - if it now behaves as other profit warning-hit stocks behave.
2) What if it goes even lower than the 140's?
By buying only a first tranche that leaves room to top-up on any deeper pullbacks from here on.
At this price the dividend jumps from the 3% divi area to a well over 4% dividend and adds a whole new positive to the buying case.
Limited numbers in the update because the full reveal isn't until July, later this year.
However, I also have the revenue figure that market guidance is looking for and that is £130m for the full year and in this update we were advised to expect:
"The Company expects to report revenue in excess of £130 million"
- Quote: "In EXCESS" !
That'll do :)
No mention of net profit but market guidance is/was looking for £ 13.7m
So a fair chance of achieving that seeing as revenue is expected to be "in excess" of previous guidance. A pity the market didn't pick up on THAT line instead.