Superdry – IP Transfer deal in Asia nets $50m cash and de-risks its balance sheet
Iconic fashion brand Superdry (LON:SDRY) has just pulled off a cracking deal out South in Korea.
The group has sold off its intellectual property assets in certain countries in the Asia-Pacific region for an upfront fee of $50m in cash.
In a deal just announced with the South Korean-listed Cowell Fashion Company, it has agreed to sell the right to own and use the Superdry brand in the key countries across the Asia-Pacific region.
Cowell, which is involved in the licensing and manufacturing of apparel products for established global brands covering sportswear, underwear and accessories, will initially launch into its South Korean market, before expanding into China and other markets.
Superdry had previously pulled out of the China market just over two years ago.
Cowell and Superdry will work closely together in product development specifically for those markets.
Superdry wins large
This deal leaves Superdry moving from a £10.8m net debt position into a net cash state at the year-end of some £23m.
And that compares with the group’s £88m market capitalisation ahead of the deal being announced.
Analyst Opinion – a big Buy
Analyst Wayne Brown at Liberum Capital, who was already super bullish about the group’s prospects, rates the shares as a big Buy, with a 500p Target Price, compared to last night’s 108p closing price.
For the current year to the end of April he is estimating £604m (£610m) sales upon which a pre-tax loss of £5.8m (profit £21.9m) is expected.
But looking at the coming year Brown goes for £645m sales, £17.6m profits and earnings of 17.6p per share.
Even further ahead his figures for 2025 suggest £686m sales, £30.0m profits and 27.9p in earnings per share.
Conclusion – looking for a big market price move
In one very astute deal Julian Dunkerton and his Superdry Management Team have created a wonder.
It straightens off their stretched balance sheet, gives the group more power back into the Asian marketplace and shows just how undervalued the fashion group is at the moment.