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3 Things That Investors Should Know About Jumbo Group Ltd Now

Jumbo Group Ltd (SGX: 42R) is a food and beverage company that was listed only in November 2015.

The company runs the Jumbo Seafood chain of restaurants that are famous for their chili crab dish. Jumbo Group also has other brands under its banner such as Ng Ah Sio Bak Kut Teh and Chui Huay Lim Teochew Cuisine.

Jumbo Group has been a great winner since its listing. Its shares, at their current price of S$0.60, are up by 140% from the listing price of S$0.25.

Here are three important things about the company’s financials that may interest investors:

1. Latest financial results

You can see a nifty slide below from the company on its revenue and profit numbers for the quarter ended 30 June 2016:

jumbo-seafood
Source: Jumbo August 2016 corporate presentation

During the quarter, Jumbo managed to post a 13.8% increase in revenue. But, its operating expenses only increased by 7.2%. Partly as a result of this, Jumbo’s net profit after tax enjoyed a much higher surge to S$3.5 million.

2. Return on equity (ROE)

The ROE metric measures a company’s ability to generate a profit with the shareholders’ capital it has. In general, the higher the ROE, the better it could be. That said, the use of high debt can juice up a company’s ROE, but debt introduces financial risk. So, that’s something to keep in mind too.

In its fiscal year ended 30 September 2015, Jumbo reported a ROE of 22.7%, according to data from S&P Global Market Intelligence. This means that for every $1 invested, the company generates a profit of $0.227. For perspective, the median trailing return on equity of the 30 companies in the Straits Times Index (SGX: ^STI) is just 10.1%, as of July 2016.

The Straits Times Index, for those unaware, is made up of some of the Singapore market’s largest companies.

3. Valuation

At Jumbo’s current price, the company has a trailing price-to-earnings (PE) ratio of 23 and a price-to-book (PB) ratio of 6.0. For some sense of where this stands, the SPDR STI ETF (SGX: ES3) has a PE and PB ratio of 12 and 1.2, respectively, at the moment. The SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of the Straits Times Index.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.