SINGAPORE (June 27): Singapore’s first Tsui Wah opened in Clarke Quay on Jun 15 by Jumbo Group and saw positive responses with many people queueing to enter to restaurant.

Hence, UOB Kay Hian is maintaining its “hold” call on Jumbo with a target price of 53 cents.

Earlier in March, Jumbo entered into a joint venture (JV) with Tsui Wah Holdings to bring the famous Hong Kong style “cha chaan teng” to Singapore. The tea restaurant currently has 70 outlets across Hong Kong, Macau and China.

See: Jumbo in JV to bring HK-style 'cha chaan teng' to Singapore

This JV marks Tsui Wah’s maiden foray into Southeast Asia and the 140-seater outlet in Clarke Quay has seen fairly positive reviews with an estimate per pax spending of $15.

On the other hand, Jumbo is also exploring to open its sixth outlet in Singapore. It has not opened a new outlet in Singapore since the outlet in Dempsey Hill was launched in 2008.

In a Wednesday report, analyst Nicholas Leow says, “Jewel Changi Airport, which is a 10-storey complex that will house over 300 different shops and a variety of F&B options for consumers in Changi Airport, could be an interesting option for Jumbo to open a new outlet due to its strong brand equity and ability to attract tourist traffic flow.”

The analyst also predicts that other potential areas where the group may open its next outlet include Singapore’s Central Business District (CBD), which could replicate the success seen with the Jumbo Seafood outlet in IFC Mall, Shanghai which caters to the corporate crowd.

“We understand that Jumbo is also in discussions with potential partners to take other brands in its portfolio to countries outside of Singapore either through JVs or the franchising route,” says Leow.

This includes brands such as Ng Ah Sio Bak Kut Teh and JPot.

Furthermore, the group is slated to open a new outlet in Xi’an, China in June.

Although GU18 is turning out to be an expansionary year for Jumbo, its earnings is likely to remain weak as it has to incur start-up costs in relation to new outlet openings and promotional activities.

“We expect earnings growth to only return in FY19,” adds Leow.

As at 11.40am, shares in Jumbo are trading 1.5 cents higher at 52 cents or 23.8 times FY18 earnings with a dividend yield of 2.9%.