CGS-CIMB positive on Jollibee Foods, expects sustained demand for dine-in

CGS-CIMB is anticipating sustained demand for dine-in for Filipino fast-food operator Jollibee Foods Corporation, but remains cautious on the group’s China operations, amid recent news reports of Covid-19 cases rising in several areas.

The sentiment comes after the group’s H1 results beat analyst expectations. In a report dated Aug 26, CGS-CIMB reiterated its “add” call on the stock.

It also raised its target price to 255.7 pesos (S$6.36) from 242.1 pesos, implying a potential upside of 7.9 per cent from the counter’s Aug 26 closing price of 237 pesos.

The increase in target price came after CGS-CIMB made some upward revisions to its FY2022 projections due to the stronger-than-expected results. The group’s attributable income for the first half of 2022 was 62.3 per cent of CGS-CIMB’s full-year forecasts, and 80.6 per cent of consensus forecasts. 

“We lift our forecasted FY2022 attributable income by 31.8 per cent to 8.8 billion pesos due to better-than-expected gross margins and overall performance,” said CGS-CIMB analysts Paola Beatrice Lopez.

She also trimmed her earnings per share (EPS) forecasts for FY2023 as the group’s performance in H1 suggests a strong recovery from the pandemic occurring “sooner than expected”, but raised its FY2024 EPS forecasts on expansion expectations.

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“We expect domestic and foreign (excluding China) sales to remain strong, though we see cost pressures persisting until end-FY2022 due to threats to chicken supply and overall high inflation,” Lopez noted.

She expects lockdowns in China to ease over the next 12 months, which could help revive Jollibee Foods’ operations in the market.