Sunday, November 1, 2015

Jumbo IPO: Full of Crab?

Lots of other bloggers have talked about the Jumbo IPO. I've read every blog post out there related to it, and trust me, it is many times over more useful than what any of the mainstream media outlets can pump out.

I won't mention each post because there's just too many posts and there's a lot of information running around. However, I will share the gist of what I've got after processing all the different data. If you're looking for a long, lengthy and objective post, all I've got for you is... none of that, ahaha.

Business wise, I have to say that I have always liked eating at Jumbo. I have quite happy memories going to Jumbo for family celebrations. From what I know, it's one of the must-go places for Koreans that visit Singapore on holiday! However, it is definitely in the "luxury" dining class for me. I wouldn't say that I have gone to Jumbo more than two times in any given year. Can anything they do make me visit more often or spend more money when I am there? Unfortunately, I think not.

Ng Ah Sio Bak Ku Teh is pretty nice. When my father has cravings for bak ku teh, we will go there. Personally, I enjoy eat both types of BKT - the herbal and the pepper type. I view them as 2 separate and distinct kind of dishes, rather than one being "real" and the other being "fake". Then again, the normal bak ku teh from the no-name not-famous stall that I usually go to tastes fine to me. At NASBKT, I usually go for simple and just have BKT, rice, tau kua pok and and youtiao. I'm not a big organ fan, so I don't eat those stuff. Their locations aren't that convenient at all, but then again, how often do you specifically have a BKT craving? Again, not more than twice a year for me!

I have heard of J Pot before, but I've never visited it. I have never heard of Chui Huay Lim, J Cafe, Yoshimaru or the Singapore Seafood Republic before in my life. I've never come across Jumbo Catering before and I have been in charge of catering for some corporate events before. Is their catering Halal? I think that's a pretty big requirement when catering for most corporate events.

I've never knew about their e-shop, but it looks interesting! They sell the sauces for the chilli crab, pepper crab and the bak ku teh. The best part is their instruction videos for each recipe, as well as downloadable instructions in a few languages! However, their online purchasing experience is weak. I can't proceed without signing up and the postage looks ridiculously expensive. It's a good start, but they need a lot more products and also a better online experience.

Valuations wise, I think many people have hit it on the nail that this business definitely cannot be valued using it's assets or net assets. ROA is also not a good metric in my opinion. If you think about it, ROA would drop with scale unless they can maintain the capacity / patronage or increase the amount being collected from existing patrons. I don't see how they can convince me to do either of those 2 things, but I'd like to see them try.

PE is a rather decent 13.9 (FY14 audited figures) which doesn't seem ridiculous considering that the entire S&P500 is trading at 21.91 (yeah, LOL!). I guess the question to ask here is whether you think they can maintain their earnings moving forward. At such a PE, I am hesitant to call it a "growth" company because it is definitely not priced as such. If all it does is remain status quo, I think a PE of 13.9 isn't too shabby for a stable business with growth potential. This is perhaps the only slightly exciting thing about their IPO.

Overall, this isn't something that is exciting enough for me. Like Kyith from Investment Moats highlighted, if their business is doing so well, why are they going for IPO? Especially when they have a shit ton of cash?

I usually stay away from IPOs and I think this time will no different. Although I do think that if you are a trader looking to ride the hype on this IPO, it is very possible to make some quick short-term profits. However, that's just not my style. If I were to gamble, I rather punt on something more fun, like shorting the US indices.

Will you apply for the Jumbo IPO?
Yes, I love Chilli Crabs!0%
No, I am allergic to Crab0%
Maybe, I ask my fortune teller first0%


  1. "I rang your Riverside Point outlet earlier, wanting to make a group reservation for 37 pax on Nov 10 (which is almost a month away). I am surprised (and disappointed yet again!) to be told that your whole restaurant is fully-booked. This must be the 3rd time I've called way in advance of my dinner event and to be told off by your staff that I should try your Riverwalk branch. This is ridiculous! I don't know why you even bother giving away Jumbo Rewards card when membership certainly does NOT have any privileges). In this case, you should change your profile info to "FOR GROUP BOOKINGS, DO CALL 6 - 12 MONTHS IN ADVANCE FOR RESERVATIONS" "

    Saw this post on Jumbo's fb page, gave me a bit of optimism about their patronage numbers haha

    1. Hi Anon,

      Wow, that's a pretty strong comment on their FB page!

      It's not that I don't think they have tasty food, I'm just less confident about the eventual returns for new shareholders!

      I will definitely aim to try out all their other brands and re-visit Jumbo once more if I decide to be a shareholder, haha!

  2. felt like its a cashing out deal. but then i think this will still be shit hot haha

    1. Mmm, I feel you! Existing (exiting) shareholders might want to let the stock run its course to fully capitalize on the hype before handing over the bag and cashing out!

      Well, at least that's what I would do if I was an existing shareholder, haha!


Observe the house rules.