{"id":329084,"date":"2024-08-20T22:33:52","date_gmt":"2024-08-20T14:33:52","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=329084"},"modified":"2024-08-20T22:33:54","modified_gmt":"2024-08-20T14:33:54","slug":"stock-in-focus-jollibee-foods-corp-jfc-21-aug-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-jollibee-foods-corp-jfc-21-aug-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: Jollibee Foods Corp. (JFC) – 21 Aug 2024 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>21 Aug 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 335.28<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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As we continue to see JFC\u2019s goals, both in terms of margin expansion and acquisitions, slowly start to materialize alongside macroeconomic conditions improving for majority of the countries that the company operates in, we maintain our STRONG BUY recommendation for JFC with a Target Price of P335.28 per share.<\/p>\n\n\n\n

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

Earnings outperform consensus<\/strong><\/p>\n\n\n\n

JFC managed to deliver a considerable earnings growth of 30.8% year-on-year (YoY) for the second quarter driven by all-around revenue growth led by the Philippines alongside margin expansions on both the gross profit and the operating income levels.<\/p>\n\n\n\n

Systemwide Sales (SWS) for the 2nd quarter (Q2) rose 12.1% YoY as we note management stating that their champion brands Jollibee, Chowking, and Mang Inasal in the Philippines outperformed their SWS targets. Not only did JFC manage to substantially grow their SWS, they also managed to expand margins by 150 bps on the gross profit level to end up at 19.5% vs 2Q23\u2019s 18.0% while operating income posted an expansion of 90 bps as well to 7.5% from 6.6%.<\/p>\n\n\n\n

Majority posts growth, but China still weak<\/strong><\/p>\n\n\n\n

The Philippine business\u2019 same-store sales growth (SSSG) grew by 9.1% attributable to strong demand from end-of-school year activities and special occasions. North America grew by low-to-mid double digits while Smashburger continues its decline by 3.6%. Management maintains its target of $4,000 average daily sales (ADS) for Smashburger in order to bring it to positive net operating income levels, ADS has been hovering around the $3.6K levels since March of this year, which is just $400 short of its short-term target. <\/p>\n\n\n\n

The coffee and tea segment also posted noteworthy growth rates of 11.4% for CBTL and 6.8% for Milksha. Highlands Coffee on the other hand continued declining slightly by 3.3%. The biggest challenge remains to be China as weak consumer spending resulted in a massive 13.4% decline which dragged down international business growth to a certain extent as it ended with a growth rate of 4.7%.<\/p>\n\n\n\n

Adapting to prevailing market conditions<\/strong><\/p>\n\n\n\n

The company made several changes to their 2024 guidance, one of which is the reduction in CAPEX. one of the reasons that JFC stated is their cautious and long-term stance on China, meaning that they would focus on improving performance of existing stores alongside new store developments shifting to a franchise model in Tier 2 and 3 cities. <\/p>\n\n\n\n

Another change in guidance was a slight downward revision to store network growth as well, which was also a response to challenges in China. A positive change on the other hand is on the operating income growth portion as they aim to achieve 18-20% vs previous guidance of 10-15% which signifies their confidence in their ability to deliver consistent earnings moving forward.<\/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>