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

Earlier in May, Japan Foods Holding Ltd (SGX: 5OI) released its 2018 fourth quarter (4Q FY18) earnings update. As a quick introduction, Japan Foods is a Japanese restaurant chains in Singapore, operating a number of brands such as “Ajisen Ramen”, “Osaka Ohsho” and “Menya Musashi”. It has also expanded beyond Singapore to Malaysia, Vietnam, Hong Kong and Mainland China.

Here are 10 things that investors should know from its latest earnings update:

1. Revenue for the reporting quarter grew by 6.5% year-on-year to S$16.2 million.

2. Gross profit climbed 6.0% year-on-year to S$13.7 million.

3. Net profit for the quarter jumped 67.8% year-on-year to S$0.9 million.

4. Similarly, Japan Foods’ earnings per share (EPS) also increased by 68.8% to 0.54 cents.

5. The company’s gross margin declined marginally from 85.2% in the fourth quarter of FY2017 to 84.8%. This was due to lower gross margin attributable to certain brands.

6. In the reporting quarter, Japan Foods generated operating cash flow of S$2.19 million, up from S$1.44 million in the corresponding quarter last year.

7. Japan Foods had no borrowings, as of 31 March 2018, while its cash and bank balances stood at S$21.9 million.

8. Japan Foods’ working capital position was a negative S$5.1 million at the end of the reporting quarter. (Working capital is defined as current assets less cash, and less current liabilities.)

9. Japan Foods’ restaurant count in Singapore increased slightly from 49 restaurants, as of 31 March 2017, to 50 restaurants, as of 31 March 2018. Similarly, its overseas network expanded to 21 restaurants from 18 restaurants.

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

“The board of directors of Japan Foods is cautiously optimistic about the Group’s outlook notwithstanding that the operating environment in the local F&B scene is expected to remain challenging in the next 12 months due to the tight labour supply, stiff competition and rising business costs.

Besides ongoing efforts to contain costs, increase efficiency and drive sales, Japan Foods is also seeking opportunities to expand its presence in the ASEAN region and Japan by way of joint-ventures, acquisitions and / or sub-franchising its brands.”

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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.