Ivey Publishing
Jumbo Group: Initial Public Offering
Product Number:
9B16N068
Publication Date:
11/30/2016
Revised Date:
11/30/2016
Length:
11 pages (4 pages of text)
Product Type:
Case (Pub Mat)
Source:
Ivey/NUS
Jumbo Group Ltd. (Jumbo) was among Singapore’s leading food and beverage establishments. Founded in 1987, the group consisted of eight brands and operated 16 outlets—14 in Singapore and two in China. On October 28, 2015, Jumbo announced its initial public offering (IPO) of SG$22.06 million, consisting of two million retail shares and 86.23 million placement shares at SG$0.25 each. In this highly competitive market, the company’s chief executive officer and chairman was motivated to list Jumbo so it would have a bigger platform and better exposure to grow faster. He hoped a softer IPO market would attract more long-term investors. Jumbo was clearly profitable, but based on its past financial performance, what would be a reasonable valuation for each of its shares? The case covers valuation using the discounted cash flow model, weighted average cost of capital, discounted dividend model, and relative valuation, as well as the computation of underpricing.
Learning Objective:
This valuation case can be used in an advanced undergraduate or MBA course in corporate finance or financial management. It presents an opportunity for students to
  • consider benchmarks and conduct a financial statement analysis;
  • compute the weighted average cost of capital;
  • undertake a discounted cash flow valuation of a company;
  • perform sensitivity/scenario analysis on some of the assumptions;
  • apply the discounted dividend model;
  • conduct a relative valuation analysis using various peer multiple methods; and
  • examine the degree of underpricing.
Issues:
Disciplines:
Finance,  Entrepreneurship
Industries:
Finance and Insurance
Setting:
Singpore, Medium, 2015
Intended Audience:
Undergraduate/MBA
Price:
$4.25 CAD / $4.25 USD Printed Copy
$3.75 CAD / $3.75 USD Permissions
$3.75 CAD / $3.75 USD Digital Download
Associated Materials
Supplements: 7B16N068 (22 KB)
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