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Jumbo Group Limited - New Jumbo Seafood At ION
- The company opened a new JUMBO Seafood outlet in a prime shopping mall in Singapore ahead of its seasonally strong Jan-Mar quarter in 2019.
- We expect the store to yield profit margins similar to other Singapore JUMBO Seafood stores amid favourable rental cost secured at the mall.
- Maintain ADD.
First JUMBO Seafood outlet opening in Singapore in 10 years
- The company has announced the opening of a new JUMBO Seafood outlet at ION Orchard, a premier shopping mall along the prime Orchard Road shopping belt in Singapore.
- The outlet opens before its seasonally strong Jan-Mar quarter (2QFY9/19), which historically fetches c.27-29% of full-year sales for the group.
- The ION Orchard store occupies a total floor space of over 5,400 sq ft, with a seating capacity of 160, including 4 VIP rooms.
- The total JUMBO Seafood store count has expanded to 17 across Asia, with six in Singapore.
Favourable rental cost despite prime shopping mall location
- Despite the store’s location at a prime shopping mall, we understand from management that JUMBO has secured the retail space at a favourable rental cost and it could see profit margins similar to other Singapore JUMBO Seafood outlets apart from the one at the National Service Resort & Country Club.
- The group’s overall rental costs accounted for c.10% of total operating costs in FY9/18, lower than the national average of 17.9% in 2016.
Maintain ADD and Target Price of S$0.54
- We maintain our ADD call in view of robust earnings growth in FY19F and possible margin uplift on tighter cost control.
- Our Target Price remains unchanged at S$0.54, pegged to 21x FY20F P/E, marginally below regional peers’ average of 22x.
- Upside catalysts could include better-than-expected earnings growth and significant uplift in margins.
- Downside risks include a slowdown in store sales and operational cost escalation on a per-store basis.
Colin TAN
CGS-CIMB Research
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Cezzane SEE
CGS-CIMB Research
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https://research.itradecimb.com/
2018-12-13
SGX Stock
Analyst Report
0.540
SAME
0.540