FREE Stock in Focus: Jollibee Foods Corp. (JFC) – 22 April 2025 by AP Securities

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Summary of Broker’s Recommendation

Seeing as the US market only makes up a small percentage of EBITDA contributions, we are more optimistic about PH consumer spending being the driver for JFC’s topline growth. However, we still recognize the possibility of the market’s negative sentiment which can affect JFC’s current prices if the tariff war continues to heat up. Despite this, we maintain our BUY rating on JFC with a TP of P335.28/share albeit our BUY rating this time comes with a more cautious tone.

Analysis and Opinion

Concerns on indirect impact of tariffs

In a recent Bloomberg Intelligence report, the 15 largest Philippine stocks that had foreign revenue exposures were ICT (68.8%), JFC (39.1%), AC (26.5%), and URC (21.5%). Out of these 4 stocks, ICT and JFC had taken the bulk of the market’s sour sentiment as the jolly bee saw a 15.0% drop in stock prices ever since Trump’s “Liberation Day” while Razon’s port giant saw a less exaggerated 10.4% decline.

JFC sees only ‘indirect’ tariff impacts

JFC claimed that most of the input costs for its US-based stores were sourced locally, from North America. In 2023, JFC had the highest allocation of procurement budget for local suppliers. Although this is a consolidated representation of all the stores, JFC’s corporate policy is to patronize local suppliers first wherever possible which further helps diversify against risks of tariffs.

International segment is diverse enough

In addition to indirect impacts, PH market still contributes 65.1% of Global EBITDA while the US makes up only around 7.1% of Global EBITDA. From both larger and smaller scale perspectives, we see JFC’s earnings should remain largely unaffected by tariffs as it sources its raw materials locally in regions where they operate; however, suppliers seeing elevated input costs and consumers reducing discretionary spending are potential indirect impacts from tariffs that JFC face.

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