Asia Ex-J Consumer/ Transport analyst

Valerie Law, CFA

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/jumbo-group-ltd" target="_blank" data-smartkarma-citation="entities:22655:1" rel="noopener">Jumbo Group Ltd (JUMBO SP),</a> best known for its chilli crabs, has seen its share price decline over the last year due to disappointing earnings despite revenue growth over the last two years. As the group's new outlets opened between 3QFY18 and 1QFY19, they should start to contribute more significantly in 2HFY19 - FY20. In this article, we discuss the following points:
<ol>
<li>Share price weakness due to weak profits last 2 years</li>
<li>Why near-term margins are likely to stabilize</li>
<li>New restaurants opened over the calendar last year should contribute more</li>
<li>The Jumbo Seafood brand received support from the government</li>
<li>Growth Outlook</li>
<li>Valuation and Risks</li>
</ol>

Jumbo Group Ltd (JUMBO SP), best known for its chilli crabs, has seen its share price decline over the last year due to disappointing earnings despite revenue growth over the last two years. As the group's new outlets opened between 3QFY18 and 1QFY19, they should start to contribute more significantly in 2HFY19 - FY20. In this article, we discuss the following points:

Share price weakness due to weak profits last 2 years
Why near-term margins are likely to stabilize
New restaurants opened over the calendar last year should contribute more
The Jumbo Seafood brand received support from the government
Growth Outlook
Valuation and Risks


New Outlets and Branding Support Could Finally Lift Jumbo's Profits

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Cafe De Coral Holdings / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/2568" target="_blank" data-smartkarma-citation="entities:2568:1">Cafe De Coral Holdings Ltd (341 HK)</a> seems to be the Hong Kong's people's food canteen. Delicious local food at affordable prices keeps the locals and visitors happy. Does it keep investor happy? Operating at a 13.4% gross margin, 6.4% net margin with a 4% dividend yield, it seems to be alright. Over the past 4 years, increasing labour cost has shaved the gross margin by 100 basis points and net margin by 210 basis points. Now that may not seem that much but given the relatively thin net margin of 8.5% in 2013 and 2014, 210 basis points net margin erosion means a 25%decrease! Now that sounds a little different! In this report, we aim to answer the following questions of the company:<ul class=""><li>main strategy</li><li>financial ratios </li><li>key issues</li><li>dividend and capital structure</li><li>is it too late to short? </li></ul>

Cafe De Coral Holdings Ltd (341 HK) seems to be the Hong Kong's people's food canteen. Delicious local food at affordable prices keeps the locals and visitors happy. Does it keep investor happy? Operating at a 13.4% gross margin, 6.4% net margin with a 4% dividend yield, it seems to be alright. Over the past 4 years, increasing labour cost has shaved the gross margin by 100 basis points and net margin by 210 basis points. Now that may not seem that much but given the relatively thin net margin of 8.5% in 2013 and 2014, 210 basis points net margin erosion means a 25%decrease! Now that sounds a little different! In this report, we aim to answer the following questions of the company:main strategyfinancial ratios key issuesdividend and capital structureis it too late to short? 

Cafe De Coral - Tough Time Ahead as Upside Is Limited

During the Christmas holidays, overseas friends and relatives visited Singapore and asked me to book a dinner for all at Jumbo Seafood. Of all the restaurants in Singapore, why must we go to Jumbo, I asked? It turns out chilli crab was their must-have dish whenever they visit, and that seafood quality was consistent.This incident spurred me to investigate the company, so here I summarise some points for investors to savour:<ol class=""><li>Its core brands: Jumbo Seafood and NG AH SIO Bak Kut Teh have fairly high consumer ratings in Singapore and China</li><li>A big chunk of management team's remuneration is aligned with the Group's performance</li><li>The company is entering a relatively higher growth phase, with 3-year net profit CAGR at 13.2% between 2017 -2020,  vs 3% CAGR in the past </li><li>Its operating margins and ROE are superior to restaurant peers in Singapore</li><li>The group has a strong balance sheet and positive free cash flow in the last few years</li><li>Jumbo Group has the second-highest ROIC amongst peers (at 22.4%) using a 5-year average figure. At 15.2x FY19 Ex-cash PE, market may be underestimating its growth and strong brands.</li></ol>

During the Christmas holidays, overseas friends and relatives visited Singapore and asked me to book a dinner for all at Jumbo Seafood. Of all the restaurants in Singapore, why must we go to Jumbo, I asked? It turns out chilli crab was their must-have dish whenever they visit, and that seafood quality was consistent.This incident spurred me to investigate the company, so here I summarise some points for investors to savour:Its core brands: Jumbo Seafood and NG AH SIO Bak Kut Teh have fairly high consumer ratings in Singapore and ChinaA big chunk of management team's remuneration is aligned with the Group's performanceThe company is entering a relatively higher growth phase, with 3-year net profit CAGR at 13.2% between 2017 -2020,  vs 3% CAGR in the past Its operating margins and ROE are superior to restaurant peers in SingaporeThe group has a strong balance sheet and positive free cash flow in the last few yearsJumbo Group has the second-highest ROIC amongst peers (at 22.4%) using a 5-year average figure. At 15.2x FY19 Ex-cash PE, market may be underestimating its growth and strong brands.

Hungry Go Where? Jumbo Group Looks Tasty at 15.2x FY19 Ex-Cash and Best-In-Class ROIC

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

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No Signboard Holdings – Singapore Lifestyle F&B Player Debuts on SGX

Singapore

Jumbo Group Ltd is a seafood restaurant group offering multiple dining concepts catering to all types of consumers.  The Company offers restaurants in Singapore, China, and Japan.

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Jumbo Group Ltd (JUMBO SP)

New Outlets and Branding Support Could Finally Lift Jumbo's Profits

Jumbo Group Ltd (JUMBO SP), best known for its chilli crabs, has seen its share price decline over the last year due to disappointing earnings...

Valerie Law, CFA

Cafe De Coral - Tough Time Ahead as Upside Is Limited

Cafe De Coral Holdings Ltd (341 HK) seems to be the Hong Kong's people's food canteen. Delicious local food at affordable prices keeps the locals...

Henry Soediarko

Hungry Go Where? Jumbo Group Looks Tasty at 15.2x FY19 Ex-Cash and Best-In-Class ROIC

During the Christmas holidays, overseas friends and relatives visited Singapore and asked me to book a dinner for all at Jumbo Seafood. Of all the...

Valerie Law, CFA

Biggest Hospitality Stocks Average 20% YTD Gains

Singapore Exchange Ltd (SGX)

No Signboard Holdings – Singapore Lifestyle F&B Player Debuts on SGX

Singapore Exchange Ltd (SGX)

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