Jumbo Group (IPO)

Jumbo Group, best known for the Jumbo Seafood restaurant chain, has priced its public offer of 86.2m new placement shares and 2.0m new public shares at $0.25 each. The shares will be listed on the Catalist board.

Net proceeds of $37.5m will be used to establish net outlets and refurbish existing ones (29.9%), acquire new premises, equipment and machinery (28.7%) and working capital (34.9%). Post-IPO, public shareholders will account for 13.8% of total shares outstanding.

Cornerstone investors include Orchid 1 Investments (6.2%) and Osim’s founder Ron Sim (5.0%).

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 fell 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.

Based on the IPO price of $0.25, Jumbo trades at 11.9x pro forma FY14 P/E versus Old Change Kee (16.3x), Japan Foods (15.9x), Breadtalk (26.6x), Sakae Holdings (48.3x) and Tung Lok (125.6x), all of which are not very well traded.

The offer closes on 5 Nov ’15 at 12.00 noon, with trading expected to commence on 9 Nov ’15 at 9 am.

UOB is the sponsor, issue manager and alongside UOB Kay Hian as the placement agent for the IPO.