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Which Restaurant Share Has The Most Delicious Valuation Now?

There are two things that I like to do. Eat, and invest in companies with cheap shares. There are times when I can combine both passions: By investing in cheap restaurant shares.

To search for cheap restaurant shares in Singapore’s stock market, I recently compared the valuations of three well-known restaurant companies, namely, BreadTalk Group Limited  (SGX: 5DA)Kimly Ltd (SGX: 1D0) and JUMBO Group Ltd (SGX: 42R). The three valuation numbers I looked at were the price-to-book (PB) ratio, price-to-earnings (PE) ratio, and dividend yield.

The businesses

BreadTalk Group is perhaps most famous for running its namesake BreadTalk bakery outlets in Singapore and other parts of Asia. But, the company also has a portfolio of restaurants and food atriums in its banner. Some of the restaurant brands under BreadTalk Group include Toast Box, Din Tai Fung, and Sō . The company has around 1,000 stores across all its brands in 18 territories,

Kimly is the largest traditional coffee shop operator in Singapore. It currently runs a chain of 68 food outlets and 129 food stalls island-wide under various brands.

Coming to JUMBO Group, the company runs its eponymous JUMBO Seafood restaurants, serving Singapore-style seafood dishes such as chili and black pepper crabs. There are a number of other restaurant brands under JUMBO Group, which include NG AH SIO Bak Kut Teh and Chui Huay Lim Teochew Cuisine. The company has more than 20 restaurants in Singapore, China, Taiwan, and Vietnam.

The valuations

The table below shows the valuation data I found for the three companies (numbers as of 4 October 2018):

Company PB ratio PE ratio Dividend yield
BreadTalk 3.3 45.4 1.9%
Kimly 4.7 18.1 3.0%
JUMBO Group 4.7 26.6 2.2%

With the numbers above, we can see that BreadTalk has the lowest PB ratio, but the highest PE ratio and the least attractive dividend yield (the lower a stock’s dividend yield is, the higher is its valuation). Kimly on the other hand, has the lowest PE ratio and the highest dividend yield. So, I think it’s fair to say that Kimly is the cheapest among the trio.

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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.