Jollibee shares slide on Coffee Bean news

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  • JOLLIBEE Foods Corp. (JFC) saw its shares plunge to a new low last week following news that it was acquiring The Coffee Bean & Tea Leaf, which was operating at a two-year loss.

    Last Thursday, the listed fast-food giant recorded its biggest one-day loss of 8 percent and hit a fresh 52-week low of P231 after announcing the day before it was taking over the Los Angeles-headquartered coffee chain for $350 million (P18 billion). This resulted in Jollibee’s stock price tumbling by 10 percent week-on-week from P279.80 on July 19 to P252 last Friday.
    Year-to-date, Jollibee shares also declined by 14 percent, and by 23.26 percent from its highest price of P328.40 on January 29.

    Timson Securities Inc. trader Jervin de Celis said market sentiment was negative on the acquisition, given the $21-million (P1.07-billion) loss posted by Coffee Bean in 2018, which represented 12 percent of Jollibee’s net income and was expected to further drag its bottom line.

    Jollibee first acquired a 40-percent stake in Smashburger in October 2015 for $100.25 million. It later bought another 45 percent in February 2018 for $100 million and the remaining 15 percent for $10 million.

    “JFC is…one of the most expensive consumer stocks…so any slowdown in earnings may dismay investors and urge them to sell,” the trader said.

    He expects Jollibee’s full-year net profit to be flat or lower than the P8 billion it posted last year, but underscored that such “sentiment should only last in the short run.”
    Besides Smashburger, Jollibee also has stakes in Tortas Frontera, Tim Ho Wan in Singapore, Dunkin’ Donuts in China, Highlands Coffee, Hong Zhuang Yuan, Yonghe King, Hard Rock Café, and Pho24.

    The company also operates Red Ribbon, Chowking, Greenwich Pizza and Mang Inasal. It has a large stake in the firm that operates American fast-food chain Burger King in the country. (A. Ballesteros, TMT)

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