Jumbo Group

[bardsmanship]

Part of the standardisation is to facilitate franchise biz in China.

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Not just China, but also South Korea, Thailand, Vietnam and Indonesia. (From their latest corporate presentation: http://infopub.sgx.com/FileOpen/Jumbo-Co...eID=472638)

If I were to pay a P/E of 20, I will expect lots of growth in earnings (and more importantly dividends). But whether they are able to continue to expand successful, I haven't a clue. And so I don't have a position in Jumbo.

There are companies which are able to trade at higher P/Es although there is no or little growth, but I guess that is another matter.

This is where we differ, I'd actually prefer that Jumbo plough its cash into expanding (but prudently!) and adding more outlets than pay it out as dividends, since management appears capable of compounding capital at high rates of return.

Listed companies here that are in the restaurant industry seem to trade at higher multiples, because their business is more "visible" and more easily understood, I reckon. Tung Lok, Soup Restaurant, Katrina and ABR all have PEs exceeding 30. Only Japan Foods has a more "reasonable" multiple, but it's still trading at 16x earnings, and this is for basically a stable business. So Jumbo trading at 20x PE feels all right to me. Of course, it'd be even better if it were cheaper!