30 Second Pitch

Jumbo Group is a S$350 million company listed on the SGX that runs restaurants primarily in Singapore and China. The company
is growing at a good clip and earns excellent returns on invested capital despite minimal reliance on debt. Management has
proven that it can execute well overseas, where there is a sizeable market for Jumbos offerings. This long runway for growth
means that Jumbo can potentially compound returns at high rates for many years to come.

The Business

Jumbos portfolio of brands includes Jumbo Seafood, JPOT, Ng Ah Sio Bak Kut Teh, Chui Huay Lim Teochew Cuisine, J Cafe, and
the Singapore Seafood Republic. It also has a catering business and sells packaged spice mixes and pastes through its online shop
and in retail outlets.

The Jumbo Seafood brand is the most established, with the first outlet opened in 1987 at the East Coast Seafood Centre. There
are now 10 Jumbo Seafood restaurants in total - 5 in Singapore, 4 in China and 1 franchise outlet in Vietnam. The first overseas
restaurant (after a failed launch in Indonesia many years ago) was opened in Shanghai in 2013. Apart from 2014, Jumbo has
opened 1-2 new seafood restaurants overseas every year since.

Jumbo took over the Ng Ah Sio Bak Kut Teh brand in 2010 by acquiring a majority stake in the company operating what was then
the sole restaurant. It has since opened 5 more outlets, with the outlet in Resorts World Sentosa being notable for its
self-service kiosks concept.

Singapore Seafood Republic is a collaboration between Jumbo, Palm Beach, Tung Lok and The Seafood International Market and
Restaurant. There are 4 Singapore Seafood Republic restaurants in Japan, one of which is owned and operated by an associated
company and the remaining 3 by a Japanese partner. These restaurants contribute revenue and profit to Jumbo Group through
licensing fees of between 1-3% of gross sales. However, the impact to Jumbos bottom-line is small at <1% of total profit before
tax.

JPOT, Chui Huay Lim Teochew Cuisine and J Cafe are the less successful brands. There are at present 3 JPOT outlets and 1 outlet
each of J Cafe and Chui Huay Lim Teochew Cuisine.

Finally, retail sales contribute an insignificant amount (<1% of revenue) to Jumbos top line.

Why invest?

The gem in Jumbos crown is its namesake seafood restaurants, which have a very strong brand name and is closely associated
with Singapore food. Jumbo is a big draw for mainland Chinese residents in Shanghai and Beijing, as can be seen from the speed
at which the Chinese restaurants have accumulated reviews since opening. The 3 Shanghai restaurants have to-date garnered a
total of >14,000 reviews with an average rating of 4.5 to 5 stars. Likewise, the restaurant in Beijing has nearly 220 reviews just 6
weeks after officially opening in mid-July. As a point of comparison, Tung Loks second Singapore Seafood restaurant in Beijing,
which opened 8 weeks before Jumbos restaurant in mid-May, now has 250 reviews in all. Ergo, the Jumbos Beijing restaurant is
being reviewed at twice the rate of its direct competitor.

As a result of Jumbos expansion in both China and Singapore, revenue has grown at a CAGR of almost 12% in the past 4 years
from 2012 to 2016. Profits have increased at an even faster clip of nearly 20% on average, due largely to improving gross
margins partially offset by greater employee and operating lease expenses.

Jumbo also has superior ROIC ranging from 40% to >60% since 2012 (earliest available data), even after accounting for its heavy
use of operating leases, which is an off-balance sheet item. This is due partly to the nature of the business - its restaurants
collect either cash or credit that is quickly convertible to cash, thereby minimizing receivables. It also doesnt keep much
inventory on hand, except for frozen foods, since most ingredients have to be cooked and served fresh. But Jumbo also has good
profit margins of 8% to 12%, higher than most full-service restaurants, at least in years of economic growth (2012 to 2016).

Jumbos management also appears to be a cut above the rest. We see evidence of this from the fact that although F&B
revenue at Singapore restaurants has declined over the past several years, revenue from Jumbos Singapore operations has
actually been on a consistent uptrend over the same period. Moreover, management is conservative - borrowings amounted to
less than S$1 million in each of the past 5 years, or less than 5% of equity, and the company currently has zero debt.

Jumbos balance sheet is made even stronger because Jumbo generates plenty of FCFs, resulting in the accumulation of excess
cash. This cash generation ability is important because it means that Jumbo can open new restaurants every year just by
utilizing its excess cash, without issuing new equity or raising debt. Analyst estimates are that each new Jumbo Seafood outlet
requires an investment of S$1-2 million. The data available to date indicate that each new restaurant in China contributes about
S$6.5 million in revenue on average. Assuming a profit margin of 10%, this means that the payback period for each new Jumbo
Seafood outlet in China is only about 2-3 years. Indeed, Jumbos IFC and iAPM outlets in Shanghai achieved profitability within 1
and 2 months after opening respectively, a testament both to the restaurants popularity in China and to the Groups cost
management abilities.

How many new outlets can Jumbo open? Jumbo currently has 5 seafood restaurants in Singapore, which has a population of 5.7
million plus 16 million visitors in 2016. This is similar to the pool of potential customers in each of the 3 Tier 1 cities of Shanghai,
Beijing and Guangzhou, home to 24 million, 22 million and 14 million residents respectively, or a total of 60 million. Although
Jumbo has already opened 4 seafood restaurants in Shanghai and Beijing, note that the restaurants in Singapore have bigger
seating capacities than the ones in China, with an estimated total of 2,750 seats across 5 outlets. In contrast, the outlets in
Shanghai each seat between 150-300. This means that Jumbo can potentially open many more restaurants in mainland China
than it first appears. Assuming Jumbos outlets in China are able to attract as many customers as in Singapore, and an average
seating capacity of 220 per restaurant, Shanghai, Beijing and Guangzhou alone can support as many as 30 Jumbo Seafood
restaurants combined. Excluding the 4 existing China outlets, if each of these 26 new restaurants contributes S$650k to the
bottom line at steady-state, that is an additional S$16.9 million in profits. And thats without taking into consideration the other
cities and countries Jumbo can operate in, plus the potential expansion of its other brands.

After a steep correction from 79c to 54c (30% decline), the stock is now trading at reasonable multiples compared to its global
peers, considering Jumbos outsized growth potential. Jumbos EV/EBIT is 17.5, lower than the global average of 20.6, and its
EV/EBIT (1-t) - taking the tax rate into account - is 21.0, significantly lower than the global average of 28.5.

Risks

Earnings and free cash flow generation may decline in the near- to mid-term if Jumbo steps up its pace of opening new Jumbo
Seafood restaurants, including franchised outlets, as it will spend more on purchases of PPE, staff expenses and rental costs,
which may temporarily outweigh the additional cash generated from operating the new outlets. But this is not necessarily a bad
thing - in fact, it may be ideal if Jumbos cash flows and profits are temporarily diminished due to rapid expansion, since this
gives a reason for the share price to stay depressed, allowing savvy investors the opportunity to keep accumulating at good
valuations.

Another near- to mid-term risk is the redevelopment of East Coast Park, where Jumbos flagship seafood restaurant, also by far
its largest with approximately 1,000 seats, is based. The East Coast Seafood Centre has, according to former competitor Red
House Seafood, experienced a dramatic drop in footfall over the last 5-7 years. The opening of the newly redeveloped Marine
Cove in Jul 2016 exacerbated the situation, drawing more crowds away. Whether the continued redevelopment of the former
sites of Goldkist Chalets, Big Splash and Raintree Cove, scheduled to be completed by 2019, will prove to be a boon or a bane
remains to be seen.

Eating out at Jumbo is a luxury for many of its customers due to the high prices. Jumbos Singapore seafood restaurants are also
dependent on tourists as a key source of customers, especially visitors from China. Since the tourism industry is sensitive to
business cycles and consumers tend to cut spending on dining out during tough times, it stands to reason that Jumbos revenue
and earnings will be hit in economic recessions. The full extent of the impact is not known because Jumbos earliest available
financial data dates from 2012, but we take comfort from the fact that visitor arrivals to Singapore were not greatly diminished
even during the Great Recession, dipping to 9.7 million in 2009 from 10.3 million in 2007. Hence, we suspect that the impact of
economic downturns on Jumbo may be less severe than feared.

Climate change may affect supply of the mud crab Scylla serrata, a key ingredient of Jumbos most famous dishes such as the
chilli crab and black pepper crab. Mud crabs may stop spawning during high temperatures at or exceeding 32 degrees Celsius,
for instance. Fortunately, Jumbo obtains its mud crabs from diverse sources through its 20 crab suppliers. With crabs coming
from 5 different countries, Jumbo can mitigate the impact of shortages in any one location.

The remaining risk factors, such as food safety scandals, shortage of manpower and rising rental costs, are not specific to Jumbo.

Sources:
1. http://www.todayonline.com/lifestyle/making-splash-elsewhere
2. http://www.straitstimes.com/singapore/east-coast-park-to-be-upgraded-with-more-open-spaces-and-amenities
3. http://www.todayonline.com/singapore/open-spaces-sea-views-planned-raintree-cove-east-coast-park
4. http://iopscience.iop.org/article/10.1088/1755-1307/6/30/302027/pdf
5. http://infofish.org/v2/index.php/44-climatic-change-could-negatively-affect-philippine-aquaculture
6. http://www.straitstimes.com/lifestyle/food/mud-crab-supply-in-singapore-drying-up-because-of-bad-weather-and-increased-
demand
Table: Income statements, 2012-2016

2012 2013 2014 2015 2016

Revenue 87,665,000 97,624,000 112,404,011 122,794,613 136,752,226
Raw materials and consumables used (35,888,000) (37,970,000) (42,697,103) (45,339,011) (50,361,258)
Changes in inventories 62,000 81,000 678,680 (181,364) 61,049
Other income 1,517,000 1,809,000 2,567,133 3,160,336 3,334,752
Employee benefits expense (24,538,000) (27,033,000) (30,443,058) (34,751,499) (39,246,582)
Operating lease expenses (6,282,000) (7,870,000) (8,846,096) (10,334,848) (11,889,752)
Utilities expenses (2,967,000) (3,363,000) (3,506,816) (3,630,833) (3,457,258)
Depreciation expense (1,617,000) (2,762,000) (3,127,188) (3,455,276) (3,524,295)
Other operating expenses (9,158,000) (10,534,000) (11,496,035) (13,145,585) (13,341,535)
Finance costs (6,000) (20,000) (30,544) (32,269) (25,928)
Share of results of associates 85,000 59,000 87,686 56,815 137,090
Profit before tax 8,873,000 10,021,000 15,590,670 15,141,079 18,438,509
Income tax expense (1,222,000) (475,000) (1,813,115) (1,819,251) (2,730,172)
Profit for the year 7,651,000 9,546,000 13,777,555 13,321,828 15,708,337
Profit attributable to owners of the company 6,596,000 8,539,000 11,520,661 10,599,659 15,507,672
Gross profit margin 59.1% 61.1% 62.0% 63.1% 63.2%
Net income margin 8.7% 9.8% 12.3% 10.8% 11.5%

Table: Revenue by geography, 2012-2016

2012 2013 2014 2015 2016

Singapore 87,664,995 97,623,968 105,874,895 112,331,898 116,781,357
China 0 0 6,529,116 10,462,715 19,970,869

Table : Return on invested capital, 2012-2016

2012 2013 2014 2015 2016

Net operating profit after tax (NOPAT) 7,656,174 9,565,052 13,804,547 13,350,220 15,730,426
Cash & cash equivalents 29,261,676 37,435,304 47,437,976 60,060,873 59,265,086
Short-term bank borrowings 106,488 110,943 116,412 109,298 87,296
Long-term bank borrowings 870,178 771,599 674,582 586,778 512,294
Short-term finance leases 38,304 118,295 113,879 72,741 0
Long-term finance leases 53,385 299,999 200,704 62,259 0
Total equity 32,232,608 39,687,167 52,017,921 65,197,339 66,507,764
Operating lease commitments 12,585,794 13,371,966 16,601,588 24,954,622 23,582,862
Invested capital 16,480,289 16,695,427 22,056,819 30,740,125 31,337,834
ROIC 46.5% 57.3% 62.6% 43.4% 50.2%
Table: Free cash flow, 2012-2016

2012 2013 2014 2015 2016

Net cash from operating activities 10,121,169 12,859,340 16,330,112 15,117,951 19,901,333
Acquisition of PPE (5,628,006) (2,702,475) (3,558,494) (5,469,285) (7,893,108)
Proceeds from disposal of PPE 700 6,903 26,738 15,204 187,906
Dividend income from short-term investments 80,123 88,515 114,873 103,778 6,994
Dividend income from associate 0 0 80,000 0 136,000
Free cash flow 4,493,863 10,163,768 12,798,356 9,663,870 12,196,131
Cash available for dividend payout 4,573,986 10,252,283 12,993,229 9,767,648 12,339,125

Table: Jumbo Seafood Restaurant Outlets

Restaurant City Opened Seats Area (Square Feet)

Jumbo East Coast Singapore Nov 1987 1,250 20,484
Jumbo Riverside Point Singapore Sep 2002 450 8,947
Jumbo Riverwalk Singapore Sep 2004 320 (est.) 5,965
Jumbo Changi Clubhouse Singapore Apr 2006 400 7,309
Jumbo Dempsey Hill Singapore Apr 2008 320 (est.) 6,129
Jumbo IAPM Shanghai Nov 2013 280 12,239
Jumbo Raffles City Shanghai Aug 2015 >200 7,368
Jumbo IFC Shanghai Jan 2016 >160 6,997
Jumbo SKP Beijing Jul 2017 158 6,500

Table: Average revenue estimation for Chinese Jumbo Seafood restaurant, 2016

Restaurant Opened Years Since

Jumbo IAPM Nov 2013 3.2 China revenue: S$ 19,970,869 (FY 2016)
Jumbo Raffles City Aug 2015 1.4 Average revenue: S$ 6,656,956
Jumbo IFC Jan 2016 1.0
Images: Ratings of overseas Jumbo Seafood restaurants, 1 Sep 2017
Table: Key Asian cities Jumbo can expand in

City Country Population # Outlets # Seats # Potential Seats

Singapore Singapore 5.7 million* 5 2,750 (est.) 2,750
Shanghai China 24 million 3 650 (est.) 3,000
Beijing China 21 million 1 158 2,600
Guangzhou China 14 million 0 0 1,700
Shenzhen China 12 million 0 0 1,500
Ho Chi Minh Vietnam 8.5 million 0 0 1,000
Hanoi Vietnam 7.6 million 0 0 900
Bangkok Thailand 8.3 million 0 0 1,100
Jakarta Indonesia 10 million 0 0 1,200
Seoul South Korea 10 million 0 0 1,200
Tokyo Japan 9.3 million 0 0 1,100
Total 9 3,558 (est.) 18,050

* Estimated customer pool for Singapore is 5.7 million residents + 16 million tourists = 21.7 million

Table: Jumbos enterprise value calculation

Share price (on 8 Sep 2017) $0.54

Weighted average number of shares outstanding 641,333,000

Market capitalization 346,319,820

Long-term debt (from FY 2016) 24,095,156

Cash (from 9M 2017) 48,134,000

Enterprise value 322,280,976

Table: Restaurant / Dining valuation multiples, Jan 2017

Region # Firms EV/EBITDA EV/EBIT EV/EBIT (1-t)

United States 86 12.1 21.9 31.5
Europe 41 10.7 19.8 25.4
Japan 101 9.6 18.0 27.9
Emerging Markets 98 8.9 20.4 28.1
China Only 31 8.0 20.4 28.6
India Only 8 14.6 36.0 48.9
Global 346 11.4 20.6 28.5
Jumbo 1 14.7 17.5 21.0

Source: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datacurrent.html
Chart: Total visitor arrivals to Singapore, 2006-2016

Source: http://www.singstat.gov.sg/statistics/visualising-data/charts/visitor-arrivals
Table & Chart: Singapore F&B Services Index for Restaurants, 2012-2016

2012 2013 2014 2015 2016

At current prices 96.9 100.2 100.0 95.1 90.0
At constant prices 101.7 102.6 100.0 92.2 85.3
At current prices, seasonally adjusted 96.7 100.3 100.0 95.2 89.7
At constant prices, seasonally adjusted 101.6 102.7 101.9 104.7 99.4

Source:
http://www.singstat.gov.sg/publications/publications-and-papers/services/monthly-retail-sales-and-food-beverage-service-indic
es

Image: Map of East Coast Park

Goldkist Chalets
East Coast Food Village
Raintree Cove
Jumbo Seafood

Big Splash Marine Cove