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10 Quick Things That Investors Should Know About Japan Foods Holding Ltd’s Latest Earnings

In early February, Japan Foods Holding Ltd (SGX: 5OI) released its third quarter earnings update for its fiscal year ending 31 March 2018 (FY2018). As of 31 December 2017, Japan Foods has 48 restaurants in Singapore under various brands, and 22 restaurants outside of Singapore in Malaysia, Vietnam, Hong Kong, and China. The company’s restaurant brands include Ajisen Ramen, Menya Musashi, and Osaka Ohsho.

Here are 10 things investors should know about Japan Foods’ latest results:

1. Revenue for the reporting quarter grew by 11.4% year-on-year to S$18.7 million.

2. Gross profit climbed 11.7% to S$15.9 million compared to a year ago.

3. Net profit for the fiscal third-quarter jumped 73.5% year-on-year to S$2.5 million.

4. Similarly, Japan Foods’ earnings per share (EPS) also increased by 73.5% to 1.44 cents.

5. The company’s gross margin improved from 84.9% in the third quarter of FY2017 to 85.1%. This was due to better cost management with raw materials.

6. In the reporting quarter, Japan Foods generated operating cash flow of S$3.15 million, spent S$0.7 million on capital investments, and paid S$1.46 million in dividends and on share buybacks.

7. Japan Foods had no borrowings as of 31 December 2017, while its cash and bank balances stood at S$20.5 million.

8. Japan Foods’ working capital position was a negative S$4.5 million at the end of the reporting quarter. (Working capital is defined as current assets less cash, and less current liabitlies.)

9. Japan Foods’ restaurant count in Singapore declined slightly from 50 restaurants as of 31 December 2016 to 48 restaurants as of 31 December 2017. But, its overseas network expanded to 22 restaurants from 20 restaurants.

10. In its earnings update, Japan Foods gave some useful comments on its outlook:

“Japan Foods is cautiously optimistic about the outlook for the next 12 months, notwithstanding an operating environment that remains challenging due to the tight labour supply, stiff competition, rising business costs and uncertain economic and geopolitical outlook.

The Group will continue its efforts to improve operational efficiency and cost control.”

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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.