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Singapore “Flyer” of the Week: Japan Foods

JapanFoodHoldingsJapan Foods Holding (SGX: 5OI) rose 7.4% so far this week to clinch our Singapore “Flyer” accolade. The shares closed at $0.87 yesterday . At its highest point, the shares were up 16.7%.

Japan Foods has various restaurant brands, including Ajisen Ramen, Menya Musashi and Botejyu Yatai, under its umbrella. It serves a range of Japanese cuisine but has a particular focus on ramen. The brands, with the most visible one being Ajisen Ramen, are scattered across a total of 56 restaurants and food court outlets in countries like Malaysia, Indonesia, Vietnam and of course, our sunny island, Singapore. In Singapore alone, Japan Foods has 42 restaurants and food court outlets.

Monday must have been a day to remember for the shareholders of Japan Foods. The company released its first half of 2014 (1H 2014) results and it saw a net profit growth of 27.6% to S$3.8 million as compared to S$2.9 million seen in 1H 2013. The net profit rise was on the back of a 1.8% growth in revenue to S$31.0 million in 1H2014. The robust performance was due to better efficiency in usage of raw materials and production of its own noodles at the company-owned noodle production facility, reducing costs.

Japan Foods also declared an interim dividend of 1.1 Singapore cents per ordinary share, which is also the highest ever interim dividend to-date.

Japan Foods’ Executive Chairman and Chief Executive Officer, Mr Takahashi said, “While our flagship brand “Ajisen Ramen” continues to lead the pack by being the biggest revenue contributor, we will continue to seek out opportunities to diversify our brand portfolio and introduce new F&B concepts that are both innovative and compelling as part of our strategy to actively manage our brand portfolio. We have observed that ramen enthusiasts in Hong Kong, the PRC and Singapore have taken to the “Menya Musashi” brand very well and together with our joint venture partners, we will be looking for opportunities to open more restaurants under this brand.”

The company also mentioned that it will continue to focus its efforts in controlling raw material costs, improving operational efficiency and practising good restaurant portfolio management by taking into account market demand and individual restaurant’s profitability. It will continue to seek opportunities to expand its restaurant network in Singapore and its presence in overseas markets. Last month, Japan Foods launched its first Menya Musashi branded restaurant in Shanghai, the People’s Republic of China, together with its joint venture partner.

Japan Food is trading at a historical PE ratio of 15.7 and sports a dividend yield of 2.2%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.