• Maintain BUY, Target Price of SGD0.58, 19% upside. 
• Japan Foods is trading at a discount relative to peers, which is unjustified, given its industry-leading yields, high gross profit margin and stable growth prospects from the launch of new franchise brands. 
• We visited Japan Foods’ new ramen franchise restaurant Konjiki Hototogisu and came back positive about the brand’s potential for generating higher revenue per restaurant. We are also upbeat on the likelihood of it delivering net margins similar to other key brands. While this alleviates our concerns about its lower GPM, we do not expect the brand to make material revenue contributions amidst limitations on growth in the number of new restaurants.

Source: RHB Invest Research - 29 Aug 2018