Jumbo’s Q2 profits leap 49.4% to $5.8m

Thanks to strong profitability in China outlets.

Jumbo Group’s (Jumbo) China operations are sizzling, boosting the group’s 2QFY16 net profits 49.4% YoY to $5.8m.

According to a report by Maybank Kim Eng (Maybank KE), all three of Jumbo’s China outlets were profitable though two of them had operated for less than a year. In fact, the latest IFC Mall outlet was already in the black though it only opened in January this year.

Singapore revenue also jumped 12% YoY, as the two Jumbo outlets along the river as well as the Dempsey outlet performed well thanks to increased PRC tourist arrivals.

Meanwhile, Maybank KE expects Jumbo to snag greater operating leverage from the newer China outlets after they have operated for a full year. 2Q16 may only be the start of a virtuous EPS upgrade cycle that could extend for years. Further, the opening of more outlets in China in future is certainly one catalyst.

Maybank KE also notes that there may even be more upside in Singapore, where the main limit to growth has been seating capacity.

“It has come to our attention that Jumbo will be taking over Chen Fu Ji Fried Rice’s space above its Riverside Point outlet. By end-FY16, it will have expanded seating capacity there by 50%, boosting revenue without having to spend on advertising or promotions. This can also be done with other outlets,” posits Maybank KE.