The current news that Jollibee Foods Corporation (JFC) has increased its investment in the proprietor of the Asia Pacific master franchiser for Tim Ho Wan had a positive effect on the stocks of the firm. It steered the market activity last week wherein worth P714.269 million or equivalent to 3.251 million shares were exchanged from September 30 to October 4. It was the 13th most actively traded shares in the local market as what our Philippine Stock Exchange data showed. Let’s take a look at some other essential information about this.
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The share price of JFC remained at P220.20 last Friday. If we take a look at it on a year-on-year basis, the share price was 24.8% down. During JFC’s acquisition of Coffee Bean & Tea Leaf, a lot of negative feedback has circulated the market and because of that, the stock of the firm has been trading sideways. This time, the recent disclosure of the increasing investment in Tim Ho Wan has a good contribution to the performance of its stock. This is in addition to the slower inflation rate since we all know that Jollibee is one of the major consumer stocks that would benefit from higher consumer expenditure.
The feedback of investors with regards to the acquisition of CBTL has negatively affected the stocks of JFC. But there is still a bright side to this one. If Jollibee will be able to turn around the famous coffee shop, since people are expecting that the company will deliver the numbers by next year, that would be a catalyst for the price to increase again. It can be recalled that JFC bought CBTL for a price of $350 million last July and the sale was completed by September 24 after getting government approvals from the United States. CBTL will be the second-largest business next to the Jollibee brand while the coffee shop business will account for 14% of the company’s worldwide system sales.
JFC also disclosed that it will be increasing its investment in private equity funds of Titan Dining LP or the holder of Tim Ho Wan by 120 million Singaporean dollars or equal to P4.5 billion. The fund size will be bigger, from S$100 million to S$200 million. JFC’s account will have 60% of the fund, from 45%. The agreement of the deal includes the term of the fund that will end after 7 years and by then, JFC will be qualified to buy substantial ownership in Tim Ho Wan. The company plans to franchise the brand in Shanghai so it could prepare for the transition.