Insights from Jumbo AGM

Just attended the AGM this morning and manage to pop by a few conversations with the management. And here are some insights

Management

  • They are in general cautious growers. Their strategy is to enter small with their flagship brand Jumbo to understand the market to establish a local foothold before expanding their other brands. So far expansion plans are doing well but at a slow pace. The forward target pace is 5 percent overseas growth. Their PATMI target is 15 percent.
  • Their debt is zero but going forward they will probably take up some debt to fund their new corporate building and central kitchen.
  • They are mindful of their brand and particular about their food quality in their new outlets and ventures overseas. They also do market survey often and in a middle of a strategic review of their brands under their belt.
  • Ron Sim just entered to be one of their directors which could bring expertise and network into Jumbo’s expansion.

Growth status

  • China expansion plans look good and average sales per customer in flagship cities are higher than Singapore. However, their revenue per table is much lower as their restaurant operating hours are lesser and future considerations are to look at alternative locations to extend longer operating hours.
  • They are also branching into delivery for bak kut teh. However, sales are not high for Jumbo and JPot as delivery orders are mostly in the range of $10 sales. Nonetheless, it helps in their Ng Ah Sio outlets.
  • In talks of franchising Ng Ah Sio in Taiwan.
  • Prefer franchise as less development time.
  • Possible ventures into other Asian Flagship cities

Risks

  • Mud crab supply risk in China
  • Overseas franchise risk of hurting brands
  • Competitor risks in F&B
    • other “Crab” brands such as Paradise
    • Ng Ah Sio Bak KuT Teh has many competitors
    • JPot needs to be rebrand with many competitors coming in

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