Jumbo Group Ltd

Jumbo Group Ltd > Add

CGS-CIMB, Oct 4

Oct 5 close: S$ 0.47

Target price: S$0.58

JUMBO Seafood outlets in Singapore continue to capitalise on their signature chilli crab dish, seen by their strong average monthly sales of S$148-159 per square foot in Oct 2014-March 2018, compared to the declining sales of the "No Signboard Seafood" restaurants, based on our estimates. Other F&B brands under the Jumbo group also showed improvement in sales per

sq ft over the same period.

We project Jumbo would add two new Jumbo Seafood outlets in Singapore and one new Chui Huay Lim Teochew Cuisine outlet over the next 12 months. We project these three new restaurants could add S$35-S$40 million to group revenue by end-FY2020F.

If Jumbo maintains or reduces its costs per sq ft amid the opening of new outlets in Singapore and franchise expansion, we believe this would translate into uplift in FY2019-2020 net margins. We retain "add" but lower our target price to S$0.58. Risk is escalation in cost per sq ft from new outlets.

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