|MAYBANK KIM ENG||PHILLIP SECURITIES|
Jumbo Group Ltd (JUMBO SP)
Time for Tasty Re-Rating
Expansion catalysts; BUY
We resume coverage of JUMBO with a contrarian BUY and DCF TP of SGD0.70 (WACC 9%). Our TP implies 26x FY18E EPS, on par with regional F&B peers. Leveraging its reputation and consistent quality, JUMBO aims to open 4-5 new outlets a year in FY18-20E, up from just one historically. Rapid profitability in just one month for its Beijing outlet opened in Jul 2017 demonstrates the Chinese consumer’s confidence in its brand and JUMBO’s execution ability, in our view. We expect catalysts from a 3- year EPS CAGR of 15%, backed by: 1) more new outlets; 2) low upfront costs for expansion through JVs and franchises; and 3) operating leverage. Risks include execution missteps or delays.
A US$5bn acquisition is in sight
SINGAPORE | CONSUMER | UPDATE
Tapping into Vietnam’s US$6.5bn beer market via acquisition of over 25% of Sabeco
Sole bidder with advantage via Vietnamese-incorporated associate
25% stakes in Sabeco costs at least THB36bn, an implied trailing PER of 47.5x
Maintain Buy with SOTP-derived TP of S$1.18
Strategy: Sailing into another good year
Limited Downside From Current Share Price
Downside risks to CPO prices would be quite limited from hereon, as they have fallen below MYR2,450/tonne in December. However, we think there is a lack of catalysts for a significant share price recovery as demand may be hampered by India’s higher import taxes and Indonesia’s lower biodiesel quota in 1H18. Meanwhile, although La Niña is expected to be mild, any major volatility in soybean prices could affect soybean crush margins. We raise our in-house CPO price assumptions but maintain NEUTRAL on the stock but with a slightly lowered TP of SGD3.31 (from SGD3.33, 6% upside).
CapitaLand Retail China Trust
Rock Square: on growth path
Acquisition of Rock Square an indication growth.
After the divestment of CapitaMall Anzhen, CapitaLand Retail China Trust (CRCT) has acquired a much younger asset, Rock Square in the first-tier city of Guangzhou. Although the initial yield is lower in comparison, we believe the asset has greater growth potential and is also an indication of CRCT’s embarking on a growth path.
Check out our compilation of Target Prices