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Higher costs could rein in Jumbo’s rapid expansion plans: DBS

Michelle Zhu
Michelle Zhu8/10/2017 3:31 PM GMT+08  • 2 min read
Higher costs could rein in Jumbo’s rapid expansion plans: DBS
SINGAPORE (Aug 10): DBS Vickers Securities is maintaining its “hold” call on restaurant operator Jumbo Group while lowering its target price to 67 cents from 72 cents previously, with the view that the group’s growth plans may be challenged by highe
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SINGAPORE (Aug 10): DBS Vickers Securities is maintaining its “hold” call on restaurant operator Jumbo Group while lowering its target price to 67 cents from 72 cents previously, with the view that the group’s growth plans may be challenged by higher costs going forward.

In a Thursday report, analysts Alfie Yeo and Andy Sim observe that Jumbo’s recent 3Q earnings revealed signs of higher operating costs led by rents and depreciation, whereas the group’s revenue has not tracked their expectations.

Although the group’s new stores are expected to contribute to its topline through joint ventures (JVs), partnerships and franchises, the analysts say these have already been largely reflected in DBS’ growth projections.

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