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Jumbo Group Ltd – The Good And Bad That Investors Should Know About Its Latest Quarterly Result

JUMBO Group Ltd (SGX: 42R) is a food and beverage company that was listed about two years ago.

Famous for its chilli crab served by JUMBO Seafood, the company also operates a wide range of different brands such JPOT-Hotpot Singapore Style, NG AH SIO Bak Kut The, Chui Huay Lim Teochew Cuisine, J Cafe-Singapore’s Local Delights, YOSHIMARU ramen bar, Singapore Seafood Republic and JUMBO Catering.

The company has recently reported its third-quarter FY17 result. In this article, we will look at the good and bad from the announcement.

Positive

Let’s begin with the positive points first.

First of all, revenue was up 6.4% year-on-year to $34.8 million.

Secondly, overseas expansion plans progressed well for the period, with the first Beijing Jumbo Seafood outlet opened at the high-end Beijing SKP shopping mall. Also, the first franchised Jumbo Seafood restaurant began operation in Ho Chi Minh City, Vietnam.

Thirdly, the company’s balance sheet remained strong for the period, ending the quarter with $48.1 million in cash and cash equivalent and zero debt.

Lastly, the company has a positive outlook “to continue to grow its business and remain profitable for FY2017.”

Negative

Despite the positive points mentioned above, there are a number of negative points that investors should know about too.

First of all, profit attributable to owners fell by 1.1% year-on-year, despite an increase in revenue of 6.4% during the period. The drop in profit was driven by higher operating leases and depreciation costs.

Secondly, working capital increased by $1.2 million due to an increase in trade and other receivables of $1.5 million and partially offset by an increase in trade and other payables of $0.4 million.

Lastly, despite the positive outlook for Jumbo Group, “the food and beverage (“F&B”) industry is expected to continue to be challenging, given the weak economic outlook coupled with pressure on operating costs and keen competition.”

Key takeaway:

In summary, a mixed quarter for Jumbo Group with higher revenue, yet, lower profitability due to increase in operating cost.

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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.