SINGAPORE (Nov 27): Analysts are still hungry for more of Jumbo even after the group's revenue came in flat at about $153.6 million in FY19 from $153.7 million in FY18.
Revenue from the group’s Singapore operations increased by $4.0 million on the back of two new Jumbo Seafood restaurants – a new Zui Yu Xuan Teochew Cuisine restaurant and a new Chao Ting Teochew Pao Fan outlet.
However, the increase was negated by a $4.1 million decline in revenue from its restaurants in China.
The group also incurred an estimated loss of revenue of $1.2 million due to a 4-week renovation at the Jumbo Seafood Gallery outlet in Singapore.
Despite the lack of revenue growth, the group managed to record a 5.9% increase in its FY19 earnings to $11.7 million from $11.0 million a year ago.
See: Jumbo posts 5.9% rise in FY19 earnings to $11.7 mil even as revenue stalls
Together with the interim dividend of 0.5 cents per share paid earlier, this brings the total dividend payout for FY19 to 1.2 cents per share, amounting to approximately 66.0% of FY19 PATMI.
With that, CGS-CIMB Research is keeping its “add” call on Jumbo with a target price of 47 cents.
In a Nov 26 report, analyst Ong Khang Chuen says, “We expect Jumbo’s Singapore operations to be its main earnings driver in FY20, post the closure of lower-margin stores and the opening of higher-end higher-footfall outlets.”
Additionally, the group’s Jumbo Seafood outlets that opened in Ion Orchard and Jewel Changi in FY19 saw strong sales ramp-up, which Ong believes should contribute positively to FY20 bottomline. He expects Jumbo’s Singapore stores to record 2% same store sales growth (SSSG) in FY20, helped by continued tourist arrival growth.
Meanwhile, DBS Group Research is also positive on the stock as it continues to rate Jumbo “buy” with a target price of 47 cents.
In a Nov 27 report, lead analyst Alfie Yeo says, “We continue to like Jumbo for its regional expansion story, steady earnings growth, decent yield of 3.6-3.8%, strong cashflow generation, and strong balance sheet.”
Jumbo has continued to grow regionally, with two Jumbo Seafood restaurants just opened in South Korea, four Ng Ah Sio Bak Kut Teh outlets in Taiwan, and two Tsui Wah outlets in Singapore.
Outlet growth is expected to continue with plans for more Ng Ah Sio Bak Kut Teh outlets in China and Taiwan, as well as more JUMBO Seafood outlets in Thailand, Vietnam and China.
As at 2.55pm, shares in Jumbo are trading at 38 cents or 3.2 times FY20 book value with a dividend yield of 3.6%, according to DBS’ estimates.
