SINGAPORE (May 31): UOB Kay Hian is reiterating its “hold” recommendation on Jumbo Group with a target price of 41 cents and an entry price of 32 cents.

After 10 years, the group opened two new Jumbo Seafood outlets in Singapore – ION Orchard (Dec 2018) and Jewel Changi Airport (Apr 2019).

In a Wednesday report, lead analyst Joohijit Kaur says, “Despite being smaller outlets, the higher foot traffic at these outlet locations should more than offset the closure of the National Service Resort & Country Club (NSRCC) Seafood outlet in 2018.”

The latest outlet at Jewel was well received, benefitting from the Jewel’s opening which saw about 500,000 visitors during the preview period.

“With Jumbo’s strong brand equity and the tourist traffic flow, we believe the outlet should be able to turn profitable within 1-2 months. Overall, strong performance seen by Jumbo’s Singapore operations, namely the Seafood outlets, managed to offset lower revenues from its China operations,” adds Kaur.

Apart from the group’s Jumbo Seafood outlets, it has also launched two new dining concepts – Zui Yu Xuan Teo Chew Cusine and Chao Ting. This marks a total of three brands that are focused on offering Teochew Cuisine.

Zhi Yu Xuan is the sister restaurant of Jumbo’s Chui Huay Lim Teochew cuisine outlet. Thus far, the 148-seater outlet has received fairly positive reviews with an estimated average per pax spending of $55-60.

“We are positive about this latest expansion as Jumbo is building on its portfolio of brands while maintaining thick gross margins,” says Kaur.

Over in Korea, Jumbo will be opening its first Jumbo Seafood there, which is expected to begin operations in July.

Plans are also underway for two more Tsui Wah Hong Kong-styled "Cha Chaan Teng" outlets in Singapore and Ng Ah Sio Bah Kut Teh outlets in China and Taiwan.

As at 12.10pm, shares in Jumbo are trading 2.70% higher at 38 cents or 3.4 times FY19 book with a dividend yield of 3.8%.