Jollibee Q1 profit: P2.6-B (up 27%)

Jollibee [JFC 224.00, up 0.9%; 300% avgVol] [link] posted a Q1 net income attributable of P2.6 billion, up 27% from its Q1/23 net income attributable of P2.1 billion. JFC said it was able to grow profit margins and exceed its Q1 performance outlook thanks to “healthy top line growth combined with further operational efficiencies and effective management of expenses”. JFC’s system-wide sales were up 10.4% to P86.8 billion due to new store additions and same-store sales growth was up 5.5%, which JFC said was due to increased volume. Across all of JFC’s segmented business units, “Europe, Middle East, Asia” had the largest same-store sales growth (+14.7%) and system-wide sales growth (+25.5%).  The “People’s Republic of China” and “Highlands Coffee” were negative in terms of same-store sales growth (-3.7% and -9.0%, respectively), and only the People’s Republic of China business unit was negative in terms of system-wide sales growth (-3.7%). JFC said that its difficulties in China are partly due to a high bar effect from last year’s success, and a slowdown in the quick service restaurant industry in that country more generally. JFC said that while Highlands Coffee saw its same-store sales growth fall 9.0%, it did “better than industry” and managed to gain 4% market share during that period.

MB bottom-line: The bee perseveres. Buzz buzz. It has made massive bets in “coffee” and “China” that could pay off handsomely in the future, and all of this activity has likely bought the management team some more time with its shareholder base to deliver on the delicious fruits of these bets. JFC’s stock price is up almost 150% from its COVID low, but it’s somewhat rangebound between about P200/share and P270/share. The stock hit P273/share in late February, only to rapidly retreat back to the P215/share level over the next six weeks in a pattern that the share price has repeated two or three times already this year. Generally speaking, the highs are higher and the lows are higher, but maybe with all the segments firing this busy season the stock will finally be able to push out of that range?     

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