(See also: Jumbo Group 2Q earnings up 0.3% to $5.8 mil)
According to analyst Nicholas Leow from UOB Kay Hian in a Tuesday report, Jumbo’s gross margin rose 3.5% y-o-y from 60.4% in 2QFY16 to 63.9% in 2QFY17, due to better margins from the Shanghai operations. However, this still fell short of the projected 64.5% gross margins from DBS analyst Alfie Yeo, who did not expect lower sales contribution from higher margin Singapore operations.
All analysts remained positive on Jumbo’s Shanghai expansion as the operations displayed better results, with Shanghai seafood outlets accounting for about 16.5% of total sales for 2QFY17 and revenue from China outlets increasing by 28% y-o-y.
“Jumbo’s overseas expansion should be the next catalyst, though we would wait for more proof of success,” says analyst Gregory Yap of Maybank Kim Eng. “We note however that Jumbo has established a good track record in Shanghai and we are reasonably confident they can pull it off.”
Shares of Jumbo are down 4 cents at 61 cents.
