Making Sense of Jumbo Group Ltd From An Investor’s Perspective

Two of Singapore’s most famous dishes would be chili and pepper crab and a popular place to enjoy the gastronomical delights would be Jumbo Seafood restaurants, of which there are five in Singapore.

The restaurants are owned and run by Jumbo Group Ltd (SGX: 42R), which also has other brands under its belt. Jumbo Group’s other food & beverage concepts include JPOT, Ng Ah Sio Bak Kut Teh, Chui Huay Lim Teochew Cuisine, J Café, Yoshimaru, Singapore Seafood Republic and Jumbo Catering. In all, the company has 23 outlets, with 17 in Singapore, three in China, and three in Japan.

Jumbo Group was listed on Singapore’s stock market fairly recently in November 2015 at a price of S$0.25 per share. The food & beverage outfit’s share price has since grown markedly, more than doubling to S$0.59 currently.

Let’s look at how Jumbo Group has performed in the first-half of its current fiscal year (the six months ended 31 March 2016).

Revenue had grown by 13.5% year-on-year to S$70.6 million while net profit attributable to shareholders had jumped by 42% to S$7.9 million.The company’s balance sheet is not hampered by debt as well as there were cash and equivalents of S$51.4 million and just S$0.75 million in total borrowings.

Jumbo Group also displayed an ability to generate cash flow as its operating and free cash flow for the first-half of its fiscal year was S$8.07 million and S$3.69 million, respectively. The selfsame figures a year ago were S$7.13 million and $4.76 million.

In the earnings release, Jumbo Group warned that the food & beverage industry “is expected to continue be challenging, given the weak economic outlook coupled with an increase in manpower and rental costs.” But, Jumbo Group also commented that it “expects to continue to grow its business and remain profitable” for 2016.

Moreover, Jumbo Group is on the lookout for accretive acquisitions, joint ventures, and/or strategic alliances which will help it build on its market position

When Jumbo Group’s business performance is compared with its share price growth since its IPO, it’d appear that the latter has some support from the former. At its current share price, Jumbo Group has a price-to-earnings ratio of 25.

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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 Esjay does not own shares in any companies mentioned.