SINGAPORE (Aug 16): DBS Group Research has maintained its “buy” recommendation for Jumbo Group, with a target price raised from 72 cents to 77 cents, following the group’s 3QFY2016 results.
To recap, the group’s 3Q earnings had doubled to $3.4 million as sales rose 14% to $32.7 million. The sales growth came from the contribution from two new Jumbo Seafood restaurants in Shanghai, which were opened in August last year and January this year, as well as increased sales from its existing restaurants.
DBS analysts Alfie Yeo and Andy Sim noted that Jumbo’s sales were below their expected $36 million, but the group’s gross margins of 62.9% had outperformed their forecast of 61%, on the back of lower-than-expected staff and operating lease expenses. As such, the pair raised their gross margin forecast from 61.4% to 62%.