SCUTTLEBUTT

JFC, jitters from China

Amid the simmering maritime conflict, Philippine companies with exposures in the Chinese market have adopted an extra cautious stance mainly on capital infusion.

Multinational brand Jollibee Food Corp. (JFC) is now considering a franchising formula to reduce China’s capex.

Brokers said the company made several changes to its 2024 guidance, meaning that it would focus on improving the performance of existing stores alongside new store developments, shifting eventually to a franchise model in Tier 2 and 3 cities.

The company is also implementing a “slight downward revision to store network growth” due to challenges in China.

Nonetheless, the fast food giant is in line for a positive change in the operating income growth portion as it aims to achieve an 18 percent to 20 percent increase versus the previous guidance of 10 percent to 15 percent, which signifies confidence in its ability to deliver consistent earnings moving forward.

Same-store sales growth grew by 9.1 percent, attributable to strong demand from end-of-school year activities and special occasions.

North America grew by low-to-mid double digits while its 2018-acquired Smashburger continued its decline by 3.6 percent. Management maintains its target of $4,000 average daily sales (ADS) for Smashburger to bring it to a positive net operating income level.

The biggest challenge to JFC remains to be China as weak consumer spending resulted in a massive 13.4 percent decline, which dragged down international business growth to a certain extent as it ended with a growth rate of 4.7 percent, according to AP Securities.

PAREX resurrects

After initially balking and indicating it would scrap the humongous Pasig River Expressway (PAREX) project due to environmental concerns, San Miguel Corp. (SMC) said it would proceed after all.

The food conglomerate which is now heavily into infrastructure pledged to address concerns in the project’s final detailed engineering design (DED), saying that the final plan will ensure that environmental considerations get priority.

“A lot of people are complaining, saying it will ruin their condo view. Really, that’s their concern. Some say the project would cover the entire Pasig River, but it was too much. It will not cover the Pasig River,” SMC president and CEO Ramon S. Ang said in a briefing.

The SMC chief, however, said that he is keeping the option of not proceeding with the project.

“If it’s just going to cause disputes, then let’s hold off for now,” he was overheard saying.

‘A lot of people are complaining, saying it will ruin their condo view. Really, that’s their concern. Some say the project would cover the entire Pasig River, but it was too much. It will not cover the Pasig River.’

Still, SMC is drafting the DED, which is a requirement from the Toll Regulatory Board (TRB) if the project will proceed. To soften the impact of the disputes and the project is ready to be built, SMC will call for a public consultation.

“If the public says it’s a go, then it’s a go. If it’s not a go because certain issues need to be addressed, we will address them again,” Ang said.

In 2021, the government greenlighted SMC’s proposal to ease gridlock from east to west of Metro Manila by reviving water transportation through the PAREX.

SMC tapped urban planner Felino Palafox Jr. to help develop the master plan for the project.

PAREX — the supposed first privately-funded road network in the country — was envisioned to be a six-lane elevated expressway along the banks of the Pasig River.

It aims to connect the Radial Road-10 in Manila, EDSA, and C5, decongest Rizal, Cainta, and Marikina, and provide faster and alternative access to Makati, Ortigas, and Bonifacio Global City.

The road was initially planned to have three segments — Segment 1 is from R-10 to Plaza Azul, Manila; Segment 2 is from Pandacan to C-5, and Segment 3 is from C-5 to C6.

Additionally, PAREX would also connect to and utilize a 2.7-kilometer portion of the new Skyway Stage 3 from Nagtahan to Plaza Azul.