Jumbo Group - CGS-CIMB Research 2022-12-13: Clawed Out Of The Red

Jumbo Group - Clawed Out Of The Red

  • Following Jumbo Group (SGX:42R)’s return to profitability in 2HFY22 (Apr 2022 to Sep 2022, net profit of S$4.4m), we expect Jumbo's FY23F net profit to record a significant rebound to S$8.6m (vs. FY22: S$0.1m net loss).
  • Key positives from 2H22 financials include a strong rebound in Singapore revenue as outlet footfall gained traction, and an exceptionally strong gross profit margin of 66.3% (vs. 2H21: 61.9%).
  • Jumbo's FY22 revenue from China fell 12% y-o-y to S$28m on the back of stringent COVID-19 measures imposed in the region.
  • No dividends were proposed for the FY22. See Jumbo Group's Dividend History.
  • Jumbo's management shared that revenue and footfall of some of its Singapore outlets were close to pre-COVID levels in 4QFY22. We expect FY23F Singapore revenue to ramp-up further from
    1. gradual return of North Asian tourists as the region reopens further,
    2. easing COVID-19 restrictions (removal of restaurant dine-in limit and resumption of corporate meals), and
    3. higher contribution from new outlets opened in FY22.
  • While we see the possibility of further downtrading as consumers exercise financial prudency, we believe the impact should be cushioned by the return of tourists and resilient restaurant sp end from middle-upper income consumers.
  • With China announcing nationwide relaxation of COVID-19 restrictions on 7 Dec 22, we believe that Jumbo’s China operations are set for a steady recovery in FY23F as restaurant footfall improves.
  • We lower our FY23-24F EPS forecast for Jumbo by 3-5% as we fine-tune our estimates post 2H22 results. We believe Jumbo appears set for a steady recovery in FY23F. At current levels, Jumbo trades at 16.2x CY24F P/E, approximately 2.2 standard deviation below its 3-year historical mean (FY16-18).
  • We raise our target price for Jumbo to S$0.35 as we rollover to 20x CY24F P/E, based on 1.5 standard deviation below its 3-year historical mean. Upgrade Jumbo to ADD.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.

Kenneth TAN CGS-CIMB Research | ONG Khang Chuen CFA CGS-CIMB Research | https://www.cgs-cimb.com 2022-12-13

Previous report by CGS-CIMB:
2022-05-17 Jumbo Group - Bumpy Path To Recovery.

Price targets by other brokers at Jumbo Group Target Prices.
Listing of research reports at Jumbo Group Analyst Reports.

Relevant links:
Jumbo Group Share Price History,
Jumbo Group Announcements,
Jumbo Group Dividends & Corporate Actions,
Jumbo Group News Articles

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