Jumbo Group (IPO)

Jumbo Group, best known for the Jumbo Seafood restaurant chain has lodged its preliminary prospectus for a listing on the SGX Catalist Board.

The IPO could raise about $30m. Jumbo currently operates 14 outlets in Singapore and two outlets in China under five brands, and plans to open more outlets in these markets offering existing and/or new dining concepts to reach a wider audience.

Aside, the group intends to acquire a new premise to house its corporate headquarters, central kitchen, and development kitchen, as well as expand its business via acquisitions and/or joint ventures.

Brands under Jumbo (inclusive of associates) include Jumbo Seafood, JPOT, Ng Ah Sio Bak Kut Teh, Singapore Seafood Republic and Yoshimaru Ramen Bar.

Under the Jumbo Seafood brand, it sells its signature chilli crab and black pepper crab. The flagship Jumbo Seafood outlet in East Coast Seafood Centre is one of Tripadvisor’s 50 iconic places to visit in Singapore.

Over FY12-14, the group enjoyed a three-year net profit CAGR of 20.4% to $11.5m on the back of an 8.6% revenue CAGR to $112.4m. For 1H15, revenue expanded 11.4% across all segments and markets to $62.2m but earnings 10.9% to $5.6m, dragged by higher employee expenses and other operating expenses.

Though Jumbo does not have a formal dividend policy, it intends to pay out 30% of net profit for FY16-17.

Pricing for the IPO has not been fixed. Hence, it is premature to pin a valuation on the restaurant chain. The 12-month trailing P/Es of peers vary widely - Old Change Kee (15.9x), Japan Foods (18x), Breadtalk (26x), Sakae Holdings (49.4x), Soup Restaurants (91.6x), Tung Lok (117.8x), and are not very well traded.