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SHARE WATCH: Big brands, big wins this RWC

Sep 21 2015 06:51
*Kirk Swart

Cape Town - Rugby World Cup (RWC) 2015 is underway and as with all big sporting events, companies are always keen to use such events to promote their brand.

From clothing to beer, companies use this opportunity to reach an audience of millions. Here are some of the brands that you are likely to see at this year's Rugby World Cup 2015.

Here are the five shares to watch during this Rugby World Cup.

1. Adidas [ADS:XETRA]

Adidas is one of the world's most recognised sports, clothing, and accessories brands. Adidas has a number of famous subsidiaries such as the golfing brand TaylorMade and the athletic footwear and apparel brand Reebok. For the full year of 2014, Adidas increased group sales by 6% on a currency neutral basis to €14.534bn.

The poor growth in sales can be largely attributed to a 28% drop in sales at TaylorMade. The Adidas and Reebok brands have grown sales with 11% and 5% respectively.

The first half of 2015 was more of the same as group sales only increased by 5% with Adidas and Reebok growing sales by 8% and 6% respectively, with TaylorMade showing a double-digit decline in sales. The Adidas share price of €70.36 is underpinned by a price to earnings ratio of 24.

At RWC 2015, Adidas will be seen on the jerseys of New Zealand, France and Italy.

2. Asics [7936:JP]

Asics, the worldwide Japanese footwear and sports equipment producer has built its brand based on the quality of its running shoes. Asics began trading in 1949 under the name Onitsuka Co, which in later years merged with GTO and JELENK to form Asics as we know it today. Asics still produces its vintage shoes under the name Onitsuka Tiger.

For the 2014 financial year ending March 2014, Asics reported group sales of ¥329.465bn and for the nine months from April 1 2014 to December 31 2014, they reported group sales of ¥354.052bn. This is an increase of 7.5% for the nine months.

In the last five years, Asics has implemented a growth plan in which it targets consolidated net sales of ¥400bn by the end of this fiscal year, which has been changed to December 31 2015. The Asics share price of ¥3005 is underpinned by a price to earnings ratio of 25.

At RWC 2015, Asics will be seen on the jerseys of South Africa and Australia.

3. Under Armour [UA:NY]

Under Armour, founded in 1996 by Kevin Plank, is an American sportswear and accessories company. Their flagship product is designer tight fitting micro-fibre T-shirts which athletes wear underneath their sporting gear. The company has expanded its product range substantially to include various sports clothing and casual apparel.

Since 2006, Under Armour has developed its own footwear range which can be seen across various sporting codes.

Under Armour can be classified as a growth company which managed to grow net revenues for the 2014 financial year by 32% to $3.08bn. They are estimating that in 2015 they will post net revenues of $3.84bn which is an increase of 24.68%.

Under Armour's share price is trading at very high valuations with a lot of blue skies priced in. It is trading at $104 and is underpinned by a price to earnings ratio of 110.

At RWC 2015, Under Armour will be seen on the jerseys of Wales.

4. Nike [NKE:NY]

Along with Adidas, Nike is arguably one of the most recognised sports brands in the world. This multinational company reported revenue for the year ending March 2015 of $30.601bn, an increase of 10% on 2014's $27.799bn.

Apart from clothing and footwear, Nike designs and produces various lifestyle products from spectacles, watches and jewellery as well as sporting equipment such as golf clubs, hockey clubs, cricket bats, and a lot more.

Like Adidas, Nike has various subsidiaries such as the Nike Brand, Jordan Brand (Basketball), Hurley and Converse. In 2015, the Nike Brand and Converse sales accounted for 46% of total group revenues. Trading at $114.47 per share, Nike is underpinned by a price to earnings ratio of 30.77.

At RWC 2015, Nike will be seen on the jerseys of Argentina.

5. Heineken [HEIA:NA]

Heineken, the world’s third-largest brewer behind SABMiller [JSE:SAB] and AB InBev, is one of RWC 2015 official sponsors. The Dutch company owns over a 160 breweries across the world, which include famous beers like Heineken, Amstel and Murphy's. If the merger between AB InBev and SABMiller is to be successful, Heineken will become the second largest brewer by default.

For the year ending 2014, Heineken reported revenues of €19.257bn, which is up slightly from the 2013 revenue figure of €19.203bn. Despite little top line growth, net income grew by 10% for the same period to €1.758bn. Trading at €73.12, Heineken is trading on a price to earnings ratio of 20.8.

Agree with Kirk's stock picks? Send us yours and why.

* Kirk Swart is an analyst at Overberg Asset Management (OAM), an Authorised Financial Services Provider (No. 783) which specialises in the private management of local and global discretionary portfolios as well as pension products.

Disclaimer: The above article does not constitute financial advice and is not a recommendation. Investors must always seek the advice of professionals and trade with caution. Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.


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