Jollibee’s near-pandemic operating profit brings optimism

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INVESTORS have become optimistic about Jollibee Foods Corp. (JFC) after its top executive briefed shareholders on the company’s strong business rebound as its operating profit edged closer to pre-pandemic levels last year.

Data from the Philippine Stock Exchange showed that a total of 2.84 million shares worth 573.63 million pula were traded from June 27 to July 1, making it the 15e the most actively traded stock last week.

Shares in Tony Tan Caktiong’s company rose 2.5% week-on-week to 205 pesos per share on Friday. Since the start of the year, the stock has fallen 4.7%.

In a Viber message, Globalinks Securities and Stocks, Inc. sales chief Toby Allan C. Arce said the growth was primarily driven by the company’s “strong” first-quarter earnings report.

Timson Securities, Inc. Head of Online Trading Marc Kebinson L. Lood anchored the stock company’s uptrend on optimism among investors and market participants.

At JFC’s annual shareholders’ meeting on June 24, Chairman and CEO Ernesto Tanmantiong noted that the company had turned around in the past year, calling it “a defining achievement of the company. for 2021 – having generated operating profit at the same level as pre-pandemic levels even as system-wide sales lagged 13.2%.”

Mr Lood said in a text message: “Investors are somewhat pleased with this news, particularly in the long term, as JFC is more focused on international expansion, which has more room for exponential growth, and the A strong rebound in operating profit shows no signs of slowing down the company’s goal of becoming one of the world’s top five restaurant chains.

Last year, operating profit amounted to 6.32 billion pesos, almost equal to the 6.48 billion pesos recorded in 2019.

In the first quarter of this year, JFC’s attributable net income increased more than tenfold to reach 2.31 billion pesos in the first quarter of last year, compared to 152.65 million pesos in the same period last year.

As mobility restrictions continue to ease while commodity prices continue to rise, Arce expects JFC’s second-quarter net profit to reach 1.6 billion pesos. It forecasts that profits for the year 2022 and 2023 will reach 6.4 billion pesos and 8.6 billion pesos respectively.

Mr. Lood expects JFC’s net income to reach 7.5 billion pesos by the end of the year as store expansion continues.

For Mr. Arce, market participants should monitor the country’s inflation rate as it can affect the prices of the company’s inputs, among others.

“In the immediate term, investors and businesses will continuously monitor inflation levels, as accelerating inflation may raise input prices, [and] reduce the purchasing power of consumers unless incomes increase. Likewise, monetary policies employed to contain inflation can harm growth and employment,” he said.

“Rising commodity prices will definitely affect JFC in terms of increased raw material cost, increased transportation costs and most likely supply chain issues. It would eventually eat into the bottom line of the business,” Arce added.

Mr Lood expressed optimism that “the company’s rapid expansion could offset costs and generate significant revenue in the future”.

“Immediate support is estimated between P200.00 and P198.80. If broken, the stock could pull back to P192.00. Immediate resistance, on the other hand, can be placed between P205.40 and P206. If breached, the next observed level is at P210,” Arce said.

Mr. Lood pegged support at P192, while placing JFC’s resistance at P222. — Mariedel Irish U. Catilogo

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