Jumbo Group - UOB Kay Hian 2019-03-14: Takeaways From Taiwan Asean Conference

JUMBO GROUP LIMITED (SGX:42R)

Jumbo Group - Takeaways From Taiwan Asean Conference

Jumbo Group’s strategies and growth plans remain unchanged with management looking to anchor growth in the domestic market through new outlet openings and new F&B concepts while leveraging on brand equity to expand overseas footprints.
Maintain HOLD with a PE-based target price of S$0.41. Entry price: S$0.37.

We recently met with JUMBO GROUP LIMITED (SGX:42R)’s management at the ASEAN Conference in Taiwan. This report highlights the key takeaways.

Jumbo Group targets to open more outlets in Singapore to drive growth in Singapore operations. In the next six months, Jumbo Group intends to open one Jumbo Seafood restaurant, 1 new Teochew Cuisine outlet and 2 Tsui Wah Cha Chaan Teng outlets in Singapore.
In addition, Jumbo Group also cited the potential opening of 1 new outlet in Shanghai and up to 2 new outlets in Beijing. Management is also exploring JVs and/or franchises in other Chinese cities such as Shenzhen and Xiamen.

Jumbo Group entered into a JV with TCI Inc. , a subsidiary of Didim Inc. to introduce Jumbo Seafood into South Korea. The first Jumbo Seafood restaurant is targeted to be operational in Seoul by Sep 19.

In addition to new outlet openings in Singapore and overseas markets, management remains open to M&A opportunities which can enhance Jumbo Group’s current brand mix or are complementary to its current business.

We maintain our earnings forecasts as we await announcements of any conclusion of new franchises or outlet openings.
Risks include a slowdown in sales in China and poor reception at new outlets.

Maintain HOLD with a PE-based target price of S$0.41, pegged to peers’ average 2019F PE of 20.0x. Entry price is S$0.37.

Yeo Hai Wei UOB Kay Hian Research | John Cheong UOB Kay Hian | https://research.uobkayhian.com/ 2019-03-14

SGX Stock Analyst Report HOLD MAINTAIN HOLD 0.410 SAME 0.410