{"id":324155,"date":"2023-07-20T11:27:37","date_gmt":"2023-07-20T03:27:37","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324155"},"modified":"2023-08-04T01:02:02","modified_gmt":"2023-08-03T17:02:02","slug":"stock-in-focus-jollibee-foods-corp-jfc-20-july-2023-by-ap-securities-2","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-jollibee-foods-corp-jfc-20-july-2023-by-ap-securities-2\/","title":{"rendered":"Stock in Focus: Jollibee Foods Corp. (JFC) – 20 July 2023 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>JFC<\/td><\/tr>
Company Name<\/strong><\/td>Jollibee Foods Corp. <\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>20 July 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Sell and Buy Back<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 277.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

With its current P\/E of 33.65x and closing price of P255.00, JFC would have to generate an EPS of P7.58\/share in order to justify such a multiple. If one were to take this EPS however and multiply it to the 5-year pre-pandemic mean P\/E, then this would imply a TP of only P280.20, very close to our own estimated Target Price of P277.00. <\/p>\n\n\n\n

Given the lack of catalysts that would justify a sudden jump from its pre pandemic multiple, this would further validate the limited upside that JFC possesses. Given this, we would therefore recommend clients to SELL and BUY BACK at P243.00 (or lower).<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

Profitability prospects still strong<\/strong><\/p>\n\n\n\n

Despite the higher comparative bases for succeeding quarters, we expect JFC to still come in with solid all-around performance. For this year, management is guiding towards gross store openings of 550 to 600 stores, in line with our forecast of 575 new additions. In terms of systemwide sales (SWS), the company expects to see expansion of 15 to 20%, which we note poses quite a premium to our own estimate of 11.3% growth. This suggests that a positive surprise with regard to the top-line may very well be in play. While the company is not out of the woods yet when it comes to feeling the effects of higher prices in several raw materials, performance in this regard should be markedly better compared to last year, with gross margins likely to remain slightly above the 18% range (versus 2Q 2022 at 17.9%). Additionally, cost-savings on the OPEX side is likely to magnify operating leverage even further, which should be a positive for the overall bottomline.<\/p>\n\n\n\n

\u2026But valuations are heavy on the pocket<\/strong><\/p>\n\n\n\n

Having brought up the company\u2019s promising financial performance, we would like to point out however, that current valuations are too expensive. Aside from JFC\u2019s limited upside of only 8.6% at our Target Price, current P\/E level is also already hovering quite close to its 5Y pre-pandemic mean.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>