Despite the current high inflationary background, the group’s margins have held up well. Jaiswal says, “We believe Japan Foods’ standardised food inputs across all its operations, an efficient central kitchen operation, and improved labour productivity should enable it to maintain its margins.”
RHB Group Research is keeping its “buy” recommendation on Japan Foods Holding with an unchanged target price of 60 cents, following SingStat’s latest retail numbers, which saw Singapore’s restaurant industry maintaining its growth momentum in October, as it registered 61.1% y-o-y sales growth for the month.
Analyst Shekhar Jaiswal says: “While we expect the rate of growth to moderate, we still expect the industry to deliver positive growth in 2023. Japan Foods’ strong balance sheet, which has helped it to survive the pandemic, its ability to sustain strong gross margins, and its recent expansion into halal restaurant brands should continue to support strong profit growth during FY2023 to FY2025.”
