RCBC Securities, Rizal Commercial Banking Corp.’s (RCBC) stock brokerage unit, is all bullish on the retail sector including multinational food chain Jollibee Foods Corp. (JFC).

JFC will continue to benefit from strong growth in consumer spending based on RCBC Securities’ projections.

Domestic operations remain robust, accounting for the bulk of JFC’s first half of 2024 earnings before interest, taxes, depreciation and amortization (EBITDA).

The review said Jollibee, Mang Inasal, and Chowking are the main growth drivers locally for the group.

On the international front, EBITDA contribution improved as Jollibee North America, Jollibee Europe, Middle East, and Africa (EMEA), Chowking EMEA and CBTL (unit Coffee Bean and Tea Leaf) showed strong potential as it continues to thrive amid global headwinds.

RCBC Securities said the gains offset weakness in China.

“We forecast 2024 revenues to expand by 15.3 percent to P281.4 billion as EBIT will likely grow double-digit this year supported by the strong business. Management also upgraded their 2024 EBIT growth forecast from a range of 10 percent to 15 percent to 18 percent to 20 percent as better-than-expected first-half earnings may continue.”

It said, “this is in line with 2024 forecasts of 18 percent earnings growth and 19 percent core net income expansion to P10.4 billion.”

Growth trend steady

JFC posted a 1st half core net income of P5.7 billion, up 29 percent year-on-year, which RCBC Securities said was above consensus and estimates. Consolidated system-wide sales and revenues grew by 11.3 percent and 10.9 percent to P182.6 billion and P128.5 billion, respectively, on the back of 6.3 percent same-store sales growth and 5.1 percent growth from new stores.

It translated to a 16.2 percent growth in gross profits to P24.3 billion on an 18.9 percent margin expansion due to lower cost of goods. EBITDA was up 18.2 percent to P18.8 billion on a 90 basis points (bps) margin improvement, and operating income jumped 20.6 percent to P9.2 billion as margins improved by 0.5 percent to 7.1 percent.

RCBC Securities maintained that JFC will continue to see topline growth at records.

“We also believe that the company’s long-term growth potential remains promising as it expands its portfolio both locally and internationally, enhances its coffee & tea business, and invests in digital transformation to boost operational efficiencies,” RCBC Securities indicated.

The review said with interest rates expected to decline until next year, JFC will benefit from expansion-related activities as JFC actively pushes for more company-o wned and franchisee store openings.