Financial Adviser: 5 Things to Know About Tony Tan Caktiong’s Jollibee Foods Corp. After Its 2025 Financial Results and How to Profit from It

In periods of calm markets, investors often talk about growth stories, expansion plans, and long-term strategies. But when uncertainty rises, attention shifts quickly toward risk and capital preservation.

The global environment today is once again filled with uncertainty. The ongoing conflict in the Middle East has raised concerns about oil supply disruptions, inflation pressures, and the possibility of slower global growth. Energy markets are particularly sensitive to geopolitical tensions in the region, and any escalation could push fuel prices higher, which may affect transportation costs, food prices, and consumer spending.

The Philippine stock market has not been immune to these developments. In recent weeks, the Philippine Stock Exchange index (PSEi) has been declining on cautious local sentiment and has fallen toward the 5,800 level this week. For many investors, such declines can feel uncomfortable, especially when headlines are dominated by geopolitical tensions and economic risks.

Yet periods of market weakness often create opportunities for long-term investors.

Historically, some of the most attractive investment opportunities have appeared when markets are under pressure and valuations begin to compress. During such periods, investors who focus on strong businesses with durable competitive advantages may find opportunities to accumulate quality companies at prices that may not be available during more optimistic market environments.

In the PSE, one company that has drawn attention during the recent pullback is Jollibee Foods Corporation (PSE: JFC), the country’s largest restaurant operator and one of the few Filipino consumer brands that has successfully expanded on a global scale.

The stock has declined by about 37 percent from its peak in 2024, even as the company continues to report strong expansion in store openings and international growth. The drop reflects broader market weakness and rising investor uncertainty rather than a clear deterioration in the company’s long-term prospects.

For some investors, however, such declines raise a natural question: could the recent pullback represent a long-term opportunity rather than simply another sign of market risk?

Yet price movements alone do not determine whether a stock represents a real opportunity. When markets become volatile, it becomes even more important to step back and examine the underlying fundamentals of the business.

Market prices may move in response to sentiment, and short-term uncertainty. Over the long run, however, a company’s true value is ultimately shaped by the strength of its operations and its capacity to generate sustainable growth.

With that in mind, let’s look at key fundamentals investors should understand when evaluating the investment case for Jollibee:

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JFC’s long-term investment appeal begins with its transformation from a domestic fast-food operator into a global restaurant platform. The company now operates more than 10,000 stores across 33 countries, which places it among the few Philippine consumer companies with international scale.

In 2025 alone, the group opened 1,126 new stores, which brought the global network to 10,341 locations. This pace of expansion reflects a deliberate strategy to build scale across multiple markets while strengthening a diversified portfolio of restaurant concepts.

The growth of the store network appears clearly in the company’s financial results. In 2025, Jollibee reported systemwide sales of about P455 billion, while consolidated revenues reached roughly P305 billion. Profitability also improved. EBITDA rose to approximately P41.8 billion, while operating income increased by 19.3 percent compared with the previous year. Net income attributable to shareholders reached about P10.9 billion, which represented 5.4 percent growth from the prior year. These figures suggest that the company has begun to benefit from operating leverage as higher sales volumes spread fixed costs across a larger global network.

A closer look at store productivity also provides important insight into the company’s expansion strategy. With systemwide sales of about P455 billion, the company generated average sales of roughly P44 million per store in 2025. In 2024, estimated systemwide sales of about P390 billion from about 9,215 stores translated to P42.3 million per store.

This comparison shows that the company’s revenue growth has not come solely from opening new outlets. Average sales per store increased by roughly four percent year-on-year, which suggests that store productivity has also improved.

For investors, this pattern is important because rapid expansion sometimes weakens unit economics. In JFC’s case, however, the company has expanded its global network while maintaining stable and even slightly improving store-level sales performance.

Management expects systemwide sales growth between 8 and 12 percent this year. If revenues increase by about 10 percent and operating leverage continues to improve as the store network expands, net income could reasonably grow by roughly 12 percent, which would bring earnings to about P12.2 billion this year.

Such performance would reinforce the view that Jollibee remains in the scaling phase of its global expansion. For investors who focus on fundamentals rather than short-term market sentiment, JFC’s expanding global platform represents one of the most important pillars supporting the long-term investment case.

Another important dimension of the investment case lies in the company’s return metrics, which help determine whether the business creates value as it expands globally. Three measures are particularly useful in this context: return on equity (ROE), return on invested capital (ROIC), and return on reinvested capital (RROIC). Together, these metrics provide insight into how efficiently a company generates profits and how attractive its new investments remain.

Return on equity measures how much profit a company generates for every peso of shareholder capital. The formula is net income attributable to equity holders divided by average shareholders’ equity. In 2025, JFC reported net income of about P10.87 billion. Average equity attributable to shareholders during the year stood at approximately P75.9 billion. Dividing earnings by equity produces an estimated ROE of about 14.3 percent, which indicates that the company continues to generate a solid return on shareholder capital despite significant investments in global expansion.

A broader measure of profitability is return on invested capital, which evaluates the efficiency of the entire business rather than only the equity portion. ROIC is calculated as after-tax operating income divided by invested capital. Invested capital represents the funds committed to operating the business and typically includes interest-bearing debt plus shareholders’ equity minus excess cash and financial investments. For 2025, JFC reported operating income of about P20.15 billion. After adjusting for taxes, after-tax operating income amounts to roughly P14.1 billion. Using an estimated invested capital base of P182 billion, the resulting ROIC is approximately 7.7 percent.

Within the Asian restaurant industry, this level of return falls within the normal range for companies that continue to invest heavily in expansion. Large listed operators such as Yum China Holdings of China and Zensho Holdings of Japan typically generate around 7 to 10 percent return on invested capital, depending on their stage of network maturity. Companies that expand aggressively often report lower headline ROIC because new stores and acquisitions require substantial upfront capital before they reach full profitability.

For this reason, a more revealing metric for a growth company is return on reinvested capital, which measures the profitability of newly deployed capital rather than the return on the entire accumulated capital base. RROIC can be estimated by dividing the increase in after-tax operating income by the increase in invested capital over a given period.

Between 2024 and 2025, JFC’s operating income rose from P16.89 billion to P20.15 billion, an increase of P3.26 billion. After tax adjustments, this represents approximately P2.28 billion in additional operating profit. Over the same period, invested capital increased by about P10.4 billion as the company continued to expand its global restaurant network. Dividing these figures produces an estimated RROIC of about 22 percent.

The difference between ROIC and RROIC carries important implications for investors. The headline ROIC of 7.7 percent reflects the large capital base accumulated through years of acquisitions, supply chain investments, and rapid international expansion. The 22 percent return on reinvested capital, however, suggests that the company’s newest investments continue to generate strong incremental returns.

This distinction often appears in businesses that eventually become long-term compounders. Companies that consistently reinvest capital at high incremental returns can expand earnings over many years because each new investment generates additional profits that finance further growth.

In JFC’s case, the combination of a large global expansion runway and attractive incremental returns suggests that the company still has the potential to compound earnings as its international platform continues to scale.

Another potential catalyst for the company’s valuation lies in the planned separation and potential U.S. listing of its international business. The proposal would carve out the company’s global operations into a separate entity listed in the United States, while the Philippine operations would remain under the existing listed company. Under this structure, existing shareholders would likely receive shares in the new international company on a proportional basis. In practical terms, investors would end up owning two separate businesses: the Philippine operations and the international growth platform.

The rationale behind the separation lies in the valuation dynamics of the two businesses. At present, the market assigns a single valuation multiple to the entire company, even though the Philippine and international operations have very different growth profiles. The domestic business represents a mature market leader that generates stable cash flows, while the international business serves as the primary engine of expansion. By separating the two, investors may evaluate each segment independently and apply valuation multiples that more accurately reflect their respective growth characteristics.

At the current share price of about P177.3, Jollibee Foods Corporation carries a market capitalization of roughly P207 billion. Based on the September 2025 financial statements, the company holds about P33.7 billion in cash and approximately P140.5 billion in interest-bearing obligations, including lease liabilities. After subtracting cash from total obligations, the company’s net debt amounts to roughly P107 billion.

Adding this net debt to market capitalization results in an enterprise value of about P315 billion, which implies that the market currently values the entire business at around 7.5 times EBITDA, based on P41.8 billion in earnings before interest, taxes, depreciation, and amortization.

Company disclosures indicate that the international segment contributes about 38 percent of total EBITDA, equivalent to roughly P16 billion generated by overseas operations. Because the market currently values the entire company at about 7.5 times EBITDA, the international business is implicitly valued at the same multiple. In practical terms, this means that within the current market price, the international segment carries an implied valuation of roughly P120 billion.

However, if the international operations were listed independently and valued at 15 times EBITDA, a multiple that is more consistent with global restaurant operators, the implied enterprise value of that segment could reach approximately P240 billion. This suggests that the market may currently undervalue the international platform by roughly P120 billion.

If this additional value were eventually recognized by investors, Jollibee’s market capitalization could increase from P207 billion to roughly P327 billion. With approximately 1.17 billion shares outstanding, this would translate into an implied share price of about P280 per share, which is significantly higher than the current market price of P177.3.

In other words, the market may currently value the international business at about half of what it could potentially command as a standalone global restaurant platform. As investors begin to recognize this valuation gap and anticipate the planned separation, the market may gradually incorporate this potential value into the company’s share price. For that reason, the proposed spin-off could become an important catalyst for unlocking the value of Jollibee’s growing international business.

The ongoing conflict in the Middle East introduces uncertainty for global markets. Escalation in the region could disrupt energy supply chains, push oil prices higher, and increase transportation and logistics costs worldwide.

If such pressures persist, they could also contribute to higher inflation and slower economic growth across many countries. For consumer companies, these developments typically translate into higher input costs and potentially weaker consumer spending.

For JFC, however, the company’s geographic diversification and relatively limited exposure to the Middle East help reduce the potential impact of such geopolitical risks. JFC operates less than 100 restaurants in the Middle East, which are located in markets such as the United Arab Emirates, Qatar, Saudi Arabia, Kuwait, Oman, and Bahrain.

When viewed against a global footprint exceeding 10,000 outlets, the Middle East presence is negligible, which represents below one-percent share of the global store network

Even under a severe scenario where Middle East operations are completely disrupted, the impact on the company’s consolidated revenues would remain below one percent, while the effect on earnings would be relatively modest.

This reflects the company’s diversified global footprint. The Philippines, North America, Vietnam, and other Asian markets remain the primary drivers of revenue and profit growth. As a result, while geopolitical tensions may introduce temporary uncertainty in specific regions, the company’s overall earnings trajectory would likely remain largely intact.

From a technical perspective, the price movement of JFC can be interpreted using both Wave structure and price geometry. The chart suggests that the stock reached a major peak around P285 in late 2024, after which it entered a prolonged corrective phase.

The subsequent decline appears consistent with a five-wave downward structure, which in Wave theory typically represents a Wave C correction within a broader cycle. The decline unfolded through a series of lower highs and lower lows, with the strongest downward momentum occurring in what likely corresponds to Wave 3 of the sequence. This corrective structure appears to have reached a temporary bottom around P175 yesterday where the selling pressure began to stabilize.

From a Wave perspective, the rebound that followed may represent the beginning of a corrective recovery phase. The initial rally from roughly P175 to about P220 can be interpreted as Wave A of a new upward correction. The subsequent pullback toward the P185 area may correspond to Wave B, which typically retraces part of the initial rebound before a final upward move occurs. If this interpretation holds, the next stage would likely involve Wave C of the corrective rally, which could push the stock back toward the P225 range, with stronger resistance potentially emerging near P235, an area that previously acted as a consolidation zone during the earlier decline.

Price geometry analysis provides a complementary perspective by identifying key price vibration levels that often act as support or resistance. The P175 range appears to function as an important support zone in the current structure. This level aligns with previous swing lows and represents a major price vibration area where buying interest has emerged.

As long as this support region remains intact, the technical structure continues to favor the possibility of a rebound toward higher resistance levels. On the upside, important price resistance zones appear near P205, followed by P220, and then P235, where earlier breakdowns occurred during the decline.

Taken together, both Wave and price geometry interpretations suggest that the recent weakness near P175 may represent a corrective retracement rather than the start of another major downward leg. If the P175 support level holds, the technical outlook points to the possibility of a short-term recovery toward the P225 range as part of a corrective rally. However, a decisive break below P175 would invalidate this interpretation and could reopen downside risk toward lower support levels near P165.

Henry Ong, RFP, is an entrepreneur, financial planning advocate and business advisor. Email Henry for business advice [email protected] or follow him on Twitter @henryong888