Can Jumbo Group’s local success recipe capture China’s palate?

It currently has three outlets in the country.

Jumbo’s signature crab dishes have captured Singaporeans by the taste buds, and as the restaurant group gears for expansion in the world’s largest country by population, the question looms--could it replicate the same success it had in the city-state?

According to analysts from Maybank Kim Eng, Jumbo has room to add one more outlet in China every year, as new branches fully recoup investments in a span of just 1-3 years.

Maybank Kim Eng also adds that Jumbo's expansion in China is still at its infancy stage, but still the Chinese have been driven to chilli crabs in droves.

"We project accelerating earnings growth of 9%/11%/20% in FY16E-18E, driving China from a 10% market now to 32% of revenue by FY18E. By our estimates, its China outlets are capable of generating ROI of 32-86% with a relatively short payback period of 1-3 years which reduces risk," says Maybank Kim Eng.

Meanwhile, Maybank Kim Eng says Jumbo has demonstrated that its business is more than just crabs.

“But it has other dining concepts (eg hotpot, Teochew cuisine, bak kut teh) that can be exported overseas as well, not just in China but the rest of South-east Asia. Gross margins for all its brands run in the 40-60% range, and with scale, we see room for upside,” Maybank Kim Eng said.