Based on its previous closing price, JFC currently has potential upside of 22.0% to our target price of P277.00 which would warrant a BUY rating. We advise clients to keep position sizes limited however, as the outlook on restaurant operators is still challenging.<\/p>\n\n\n\n
According to JFC’s CFO Richard Shin, the company is targeting 150 new stores in China for this calendar year. As of 1Q 2023, 21 stores have already been opened in the region, thereby taking the current store count to 505 (after accounting for other store closures). <\/p>\n\n\n\n
Based on our estimates wherein we factor an annualized P1.11-Billion of EBITDA from the region, we can roughly see that each Chinese store generates around P2.20-Million in EBITDA. This would therefore translate to EBITDA growth of 25.5% for China once the remaining balance (129 stores) of the planned 150 stores is established.<\/p>\n\n\n\n
While contribution to systemwide EBITDA is still small (4.1%) relative to other regions, we note that this move is likely expected to be more of a long-term investment as Chinese growth gradually catches up following its current post-pandemic hurdles. Eventually, low-base effects could translate to faster-than-average EBITDA growth moving forward as consumer spending picks up.<\/p>\n\n\n\n