By Bernadette Therese M. Gadon, Researcher
INVESTORS were upbeat on Jollibee Foods Corp. (JFC) last week after its strong fourth-quarter earnings report and bullish expansion plan this year.
A total of 3.33 million JFC shares worth P800.87 million were traded from Feb. 7 to 11, data from the Philippine Stock Exchange (PSE) showed.
Jollibee’s shares were up by 1% week on week to P240 apiece on Friday from its P237.60 finish on Feb. 4. For the year, the stock has gained 11.6%.
Mercantile Securities Corp. Analyst Jeff Radley C. See said that investors were bullish with JFC as the number of new infections from the coronavirus disease 2019 (COVID-19) continued to drop.
In an e-mail, he also attributed the bullish outlook to the company’s higher capital expenditures (capex)this year, which came after it “had a pretty good income last year.”
JFC has alloted P17.8 billion in capital expenditures for this year, higher than the P7.8 billion earmarked in 2020, as it plans to open 500 more stores.
RCBC Securities, Inc. Equity Research Analyst John Renz S. Alvarado said via e-mail: “The increase in capital expenditure is timely as newly opened stores would immediately benefit from declining COVID-19 cases and the global economic reopening.”
In a separate e-mail, First Metro Investment Corp. Head of Research Cristina S. Ulang said in a separate e-mail interview that investors bought further on the news because “JFC is a play on both the election year’s spending spree and reopening of the economy.”
The election campaign in the Philippines officially began on Feb. 8, with 10 presidential candidates, giving them three months to campaign and present their platforms before the voting on May 9. Also vying for votes are nine vice-presidential and 64 senatorial bets, and 177 party-lists.
“New stores are more geared abroad given the increasingly global orientation of the store network strategy as JFC takes advantage of the greater mobility in offshore markets compared to local,” Ms. Ulang said.
In a disclosure last Thursday, JFC’s attributable net income in the final three months of 2021 rose by 59.6% year on year to P3.24 billion.
This brought its full-year attributable bottom line to P5.94 billion, a turnaround from P10.45-billion net loss in 2020. However, the year’s profit was still below the P7.3 billion earned in 2019.
System-wide sales, which includes sales to consumers, both from company-owned and franchised stores, climbed by 25.2% annually to P62.03 billion in the fourth quarter of 2021. For full-year 2021, it went up by a fifth to P211.72 billion.
Fourth-quarter revenues likewise jumped by 22.8% to P44.93 billion year on year. For 2021, revenues rose by 18.7% to P153.51 billion.
For 2022, the bulk of JFC’s spending plan is earmarked for new stores and the renovation of existing ones.
Funds will be used for supply chain and business technology investments as the company plans to build a new commissary facility in Cebu to support its expansion in the Visayas and Mindanao.
This year’s capex will be funded by cash generated from operations, bank loans, and remaining proceeds from previous bond issuances.
As the recent earnings report “broadens the income runway” this year, Ms. Ulang expects JFC’s earnings to grow by 20% year on year in the first quarter and by 50% for the entire 2022.
JFC’s topline recovery will be sustained as movement restrictions further eased, Mr. Alvarado said. He also noted that international store expansion plans would further drive JFC’s growth this year.
JFC “would be more profitable assuming [it] can maintain or further expand Q4 operating margins,” Mr. Alvarado said.
However, Mr. See said the bearish sentiment globally might affect JFC’s performance locally. He foresees the company to trade sideways “for now.” He gave his support levels at P230 and P222, and resistance levels at P245 and P260.
While Ms. Ulang noted that increased market volatility might trim JFC’s recent gains, she placed the resistance and support levels at P250 and P210, respectively.
