Jollibee gets PSE nod to lift 40% foreign ownership limit

FOREIGN INVESTORS may now own more shares of Jollibee Foods Corp. (JFC) after the Philippine Stock Exchange (PSE) approved its request to remove the 40% foreign ownership limit.

“The PSE has approved [the] request of JFC to amend its foreign ownership limit from 40% to no limit…,” the listed fast-food giant said in a regulatory filing on Thursday. 

The move follows JFC’s amendment of its primary and secondary purposes in its articles of incorporation, removing its ability to own, acquire, mortgage, pledge, or encumber land and any interest therein.

With this amendment, JFC can now accommodate more foreign investors, as it no longer has the capacity to own land. Companies that own land must comply with foreign ownership limits set by the Constitution.

Article 12 of the 1987 Constitution restricts foreign ownership of land and certain businesses to 40%, with the remaining 60% reserved for Filipino citizens or corporations. However, the government has eased foreign ownership restrictions in some industries, such as renewable energy, allowing full foreign investment.

The Securities and Exchange Commission (SEC) approved JFC’s amendment in November last year.

In May last year, JFC stated that the amendment removed the company’s ability to directly own real estate but retained its ability to invest in companies that own land and other real properties.

Following regulatory approvals, stock market analysts anticipate that JFC may sell its land assets while attracting more foreign investors.

JFC shares surged by 10.72% or P25.40 to P262.40 apiece on Thursday after the announcement.

“This could provide some positive boost for the company. Hopefully, it materializes with the stock price,” Unicapital Securities, Inc. Equity Analyst Jemimah Ryla R. Alfonso told reporters during an ambush interview in Makati City on Thursday.

AP Securities, Inc. Research Analyst Jose Antonio B. Cipres said in a Viber message that the move allows JFC to raise additional capital for expansion through a sale-leaseback transaction.

“They could use the proceeds from the sale of land to expand their current portfolio of stores, which would translate to higher earnings. This is more of a visibility play, as the amendment could result [in] the stock’s faster capital appreciation as its fundamental value finally gets recognized by a larger market,” he said. 

“We see this as something that would put JFC in an even better position [on] the global stage, as it would allow them to attract more foreign investors through the higher foreign ownership,” he added. 

China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message that the move aligns with JFC’s global expansion plans.

“The removal of the ownership restriction paves the way for JFC to attract more foreign equity participation in the company. This aligns with JFC’s ambition to be a leading player in the global restaurant industry,” he said.

“Having no nationality cap gives them a lot of headroom in case they need to get sizable foreign equity capital for their expansion,” he added.

JFC’s move follows recent acquisitions aimed at expanding its brand portfolio.

In January, JFC subsidiary Milkshop International Co., Ltd. announced a plan to acquire a 70% stake in Taiwanese wellness soup brand Moon Moon Food for NT$103.8 million (P184 million).

The fast-food giant also recently completed a S$20.2-million buyout to take full control of Hong Kong-based dim sum restaurant Tim Ho Wan.

In July last year, JFC announced the acquisition of South Korea’s Compose Coffee for $340 million to strengthen its coffee and tea business. 

For the first nine months of 2024, JFC’s attributable net income rose 24.1% to P8.47 billion, while revenue increased by 10.6% to P196.25 billion.

As of end-September last year, JFC expanded its store network by 42.8% to 9,598 locations, including 3,340 domestic stores and 6,258 international branches. 

Of its international stores, JFC operates 568 in China, 381 in North America, and 362 across Europe, the Middle East, Africa, and Asia. It also has 815 under Highlands Coffee, 1,219 under The Coffee Bean & Tea Leaf, 333 under Milksha, and 2,580 under Compose Coffee. — Revin Mikhael D. Ochave