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Analysis by: Dhenzel M. Antonio

Course and Section: BSA 2-2

Company Stock Analysis and Recommendation Report

Analysis by: Dhenzel M. Antonio

Course and Section: BSA 2-2
Report/Recommendation Date: October 10, 2019

Company Name and Ticker: PXP Energy Corporation (PSE:PXP)

Sector/ Industry: Mining ang oil
Current Price as of Report/Recommendation Date: Php 12.30

Company Profile

Organization

A.) Shareholdings
Market Capitalization 24,382,400,000.00
Outstanding Shares 1,960,000,000
Listed Shares 1,700,000,000
Issued Shares 1,960,000,000
Free Float Level(%) 30.25%
Foreign Ownership Limit(%) 40%

B.) Officers/Owners
Chairman Manuel V. Pangilinan
Director Marilyn A. Victorio-Aquino
Director Eulalio B. Austin, Jr.
 Director Daniel Stephen P. Carlos
Director Barbara Anne C. Migallos
Director Robert C. Nicholson
C.) Years of Existence

PXP Energy Corporation is an upstream oil and gas company incorporated in the
Philippines in December 2007 as a wholly-owned subsidiary of Philex Mining Corporation. It
was previously known as Philex Petroleum Corporation. After the distribution of approximately
36% of Philex Petroleum shares to Philex Mining shareholders as property dividends, Philex
Petroleum listed its shares on the second board of the Philippine Stock Exchange under the
Amended Rules on Listing by Way of Introduction of the PSE on September 12, 2011.

Strengths

Philex Petroleum Corporation (Philex Petroleum or the Company) is an upstream oil and
gas company incorporated in the Philippines in December 2007 as a wholly-owned subsidiary of
Philex Mining Corporation. After the distribution of approximately 36% of Philex Petroleum
shares to Philex Mining shareholders as property dividends, Philex Petroleum listed its shares on
the second board of the Philippine Stock Exchange under the Amended Rules on Listing by Way
of Introduction of the PSE on September 12, 2011.

The Company has interests in various petroleum service contracts in the Philippines and Peru
held directly and through its major subsidiaries, Pitkin Petroleum Plc (“Pitkin”) and Forum
Energy Plc (“Forum”).
Prior to the distribution of the Company’s shares as property dividend in 2011, the Company had
ten stockholders, nine of whom were individuals with one share each. Subsequently, the number
of shareholders totaled to 35,350. The Company's two biggest shareholders, Philex Mining and
First Pacific, are leaders in business and industry in the Philippines and Asia. Philex Mining is a
leader in mining and a pioneer in oil exploration in the Philippines, and First Pacific is an
investment management and holding company with business interests in Asia relating to
Telecommunication, Infrastructure, Consumer Food Products and Natural Resources.

Mission
We are a responsible Philippine energy resource company that explores and develops
petroleum and coal resources for the benefit of society.

Vision
Our vision is to be a highly respected world-class Philippine energy resource company
committed to delivering excellent value to its investors, employees and other stakeholders.

Corporate objective
Our objective is to increase the value of our asset portfolio through selective acquisitions
and divestments and successful exploration and appraisal.

Risks

High demand for oil requires high level of risks, PXP faced several threats on its conduct of
operation accordingly:

 Economic downturn
 Political Risk
 Geological Risk
 Rising Fuel Price Risk
 Supply and Demand Risk
 Cost Risk

Competition

Oil and mining company boosted its existence from the past 10 years but halted due to
strict government regulations and tax policies. However, remains thereto the competition for
mining and oil industry. The top competitors of PXP Energy Corporation are Apex Mining Co.
Incorporated, Asiaticus Management Corp, Atlas Consolidated Mining & Dev. Corp., Benguet
Corporation, Berong Nickel Corporation, and Bohol Limestone Corporation.
Latest Developments

 Upstream oil and and gas prospects on new areas with potential governments’ Philippine
Conventional Energy Contracting Program (PCECP)

 Interested in nominating other prospects near Recto Bank

 Lifted moratorium on all explorations and drilling works in the disputed waters.

Latest Stock Price Chart

Financials for the Past 3 years and revenue and earnings estimate for next 3 years

2016 2017 2018 2019 (6mos)

Revenue 101,579 104,445 107,924 51,395
Gross Profit (69,241) (53,782) (113,466) (17,607)
Gross Profit % -68.16% -51.49% -105% -34.26%
OPEX 20,537 (1,105) 21,405 (7,254)
EBIT (48,704) (54,887) (92,061) (24,861)
Interest (120) (130) (76) -
Taxes 73 106 1,103 28
Net Income (36,387) (57,143) (96,431) (24,889)
Current Assets 669,212 525,759 428,864 374,360
Total Assets 7,331,725 7,228,612 7,247,354 7,139,463
Current
2,959,663 2,925,930 2,159,574 767,381
Liabilities
Total Liabilities 4,273,215 3,464,936 4,226,496 2,081,764
Common Stock 1,700,000 1,700,000 1,960,000 1,960,000
Retained
128,842 122,062 122,062 122,062
Earnings
Total Equity 3,058,510 7,228,612 7,247,354 5,057,699
Cash 573,341 450,039 342,374 279,854

Financial Ratios for the past 3 years and estimate for next 3 years

2016 2017 2018 2019

Current Ratio 0.23 0.18 0.20 0.49
Debt-to-equity 1.41
1.40 0.92 0.41
Ratio
Asset-to-equity
2.40 2.41 1.92 1.41
Ratio
Interest Rate
- - - -
Coverage ratio
Net Income
(0.36) (0.36) (0.89) (0.35)
Ratio

Fundamental Valuation
 Conclusion and Recommendation

Fundamentally speaking, the exposure of this company through media and news is hasty
and hype at the same time, fluctuations to prices is inevitable thus making it more appealing to
the public. This company may be good for the short-run but not for the long-run, this stock is
fitted to those who are actively trading in the market minute by minute because of the sudden
fluctuations. Therefore, I do recommend buying on this stock, but on a tranche basis and not as a
whole as it is really not that profitable and also make sure to be attentive and aware of its price
until the market closes for the day.
 Company Stock Analysis and Recommendation Report

Analysis by: Dhenzel M. Antonio

Course and Section: BSA 2-2
Report/Recommendation Date: October 10, 2019

Company Name and Ticker: Jollibee Foods Corporation (PSE:JFC)

Sector/ Industry: Industrial, Food, Beverages % Tobacco
Current Price as of Report/Recommendation Date: Php 220

Company Profile

Organization

A.) Shareholdings
Market Capitalization 252,836,797,205.60
Outstanding Shares 1,093,584,763
Listed Shares 1,108,016,959
Issued Shares 1,110,032,103
Free Float Level(%) 43.80%
Foreign Ownership Limit(%) 40%
B.) Officers/Owners
Board of Directors
Position Name
Chairman Tony Tan Caktiong
Director Ernesto Tanmantiong
Director William Tan Untiong
Director Joseph Tanbuntiong
Director Ang Cho Sit
Director Antonio Chua Poe Eng
Director Artemio V. Panganiban
Independent Director Monico V. Jacob
Independent Director Cezar P. Consing

Management Officers
Position Name

President and Chief Executive Officer Ernesto Tanmantiong

Corporate Secretary William Tan Untiong

Treasurer Joseph Tanbuntiong

Assistant Corporate Secretary Valerie Feria Amante

C.) Years of Existence

Jollibee Foods Corporation (JFC) was incorporated on January 11, 1978. The Company's
principal business is the development, operation and franchising of quick service restaurants (QSR) under
the trade names "Jollibee", "Chowking", "Greenwich", "Red Ribbon", "Yonghe King", "Hong Zhuang
Yuan", "Mang Inasal", "Burger King", "Highlands Coffee", "Pho 24", "Hard Rock Café", "Dunkin’
Donuts", "Smashburger", "Tim Ho Wan" and "Tortas Frontera". The other activities of JFC include
manufacturing and property leasing in support of the QSR systems and other business activities.

Aside from the subsidiaries that develop and operate the Company's QSR trade names, JFC
wholly owns Freemont Foods Corporation, which owns and operates Jollibee stores in Visayas and
Mindanao, and Grandworth Resources Corporation, a real estate company which owns or leases some of
the properties used as store sites.

By the end of 2018, there were 1,146 Jollibee stores nationwide, of which 618 were franchised
and 528 were Company-owned. On international operations, Jollibee had 232 stores with 36 stores in the
US, four in Canada, one in Italy, one in United Kingdom, 116 in Vietnam, 16 in Brunei, eight in Hong
Kong, six in Singapore, one in Macau, one in Malaysia and 42 in the Middle East.

Strengths

 Jollibee has grown exponentially on all aspects on operation.

 Superior menu line-up.
 Creative marketing programs.
 Efficient manufacturing and logistics facilities.
 It is a stronghold of heritage and monument of Filipino victory.

Weaknesses

 The first name that comes to the mind of the people when someone asks about fast-food
restaurant.
 The existence of other competitors
Opportunities

 Became the first food service company to be listed in the Philippine Stock Exchange.
 Acquired Greenwich Pizza in 1994.
 Employees received extensive training so that they could learn the corporate values o of
integrity and humility.
 Free wifi

Threats

 The rivalry between Jollibee and McDonald.

 Jollibee Foods Corporation is a family-owned chain with about P6.1 billion annual sales.
It hashowever captured about 52% of the Philippines market (compared with 16% of
McDonald).
 Jollibee was reported to have been using earthworms in its beef patties for many years to
get customers ‘addicted’ to certain so-called chemical elements in earthworms.

What has made the Jollibee Successful?

Jollibee is arguably the most successful and iconic Filipino brand of all time. The
country’s home-grown fast food chain is well-loved not only for its food but for the happy
experience it gives to its customers, something that is deeply-rooted in the local Filipino culture
where eating is something to be enjoyed with family and friends, and being jolly is a way of life.
Its tagline ‘Bida ang saya’ (A joyful experience is our main offering) tells us that Jollibee is that
happy place where one can savor a crispy chicken with joy,hence the name Chickenjoy!
Known to foster Filipino values, Jollibee has become the favorite destination of kid sand
kids-at-heart. In the Philippines, children know Jollibee more than any other fast food brand and
see it as a fun treat, often prodding their parents to bring them to Jollibee as a reward for a good
deed. Who would’ve thought that the smiling bee will become associated with tasty and quality
food, and an important part of the Filipino cultural identity that the whole nation will love?

So how did this giant fast food that has become almost like a national treasure start?
 Before the idea of a fast food chain was conceived, 22-year-old Tony Tan Caktiong
started his luck out with a Magnolia ice cream parlor franchise back in 1975. Over the years,
Tony and his family expanded the chain into seven outlets, but not without noticing that people
line up more for burgers instead of ice creams. Thus, they decided to capitalize on the trend,
offering the Yumburger as one of their signature products. In1979, they had their first franchise
in Sta. Cruz, Manila, signaling the promising future of the business.

When conceptualizing the name of the business, Tony settled for the image of a red bee
with a glowing smile. He emphasized on the hardworking aspect of the insect, coupled with the
honey that symbolizes the reaping of good harvest after work. At the start of the1980s, Jollibee
graced the television screens of every home, launching their first TVcommercial, the Chickenjoy
(its brand of chicken). The Jollibee mascot also made hisde but, who instantly became a hit with
the kids who cannot keep their hands off their delicious kid-friendly meals.

Its unforgettable and widely successful Langhap-Sarap ad campaign, awarded in the 9th
Philippine Advertising Congress as the most effective in the food category sealed Jollibee as a
household name. Eventually making it to the list of Top 500 Corporations in the country, Jollibee
opened a store in Brunei in 1987, the first fast food outlet outside the Philippines. Now a fast
food giant who has not been toppled even by global brands, Jollibee has continued to expand
with its acquisition of Greenwich Pizza Corporation,Chowking, Yonghe King and Red Ribbon
Bakeshop. It now even has its own children’s show, the Jollitown!

The beaming red bee continues to become part of the happy moments and joyful meals
shared by families and friends in each Jollibee store. Jollibee’s success story is an inspiring proof
that Filipinos are not only able to compete with but can very well win over foreign giants by
being itself – a Filipino brand with a Filipino heart and spirit. This food company that started
small now operates a vast network of 750 stores nationwide and80 stores outside the Philippines,
truly a remarkable and admirable source of Filipino pride and joy.

Vision

Jollibee Foundation envisions that every Filipino is able to access basic community
services and live a life defined by dignity, purpose and active participation in nation-building.
Mission
Together with our partners, we help our communities through:

 Improved access to Education for the youth

 Leadership development for local organizations
 Livelihood programs for small farmers
 Environment-friendly initiatives
 Decent Housing and Disaster Relief for calamity-stricken regions.

Risks

 Enterprise Risk
 Financial Risk
 Equity Risk
 Interest Rate Risk
 Foreign Currency Risk
 Credit Risk
 Liquidity Risk
 Capital Managemeng Risk

Competition

Jollibee Foods Corporation engages in the development, operation and franchising of

Quick Service Restaurants (QSR). Other activities of the Group include the lease of real estate
properties.

The franchising segment is involved in the franchising of the Group’s QSR store
concepts. The real estate segment leases store sites mainly to the Group’s independent
franchisees.

Jollibee is a phenomenal success story of a business. It began as a two-branch ice-cream

parlour in 1975 offering hot meals and sandwiches and became incorporated in 1978 and signify
the birth of the revolutionised fast- food in the Philippines and it was the first fast food chain to
break the 1 billion pesos sales mark in 1989 as well as the first food service company to be listed
in the Philippine Stock Exchange in 1993.

A Macquarie report indicating that McDonald’s has been “closing in on Jollibee in terms
of preference” based on the results of a consumer survey coupled with concerns on the impact of
the government’s new labor rules on the company prompted investors to dump JFC shares for
four straight days to end at P182.10 apiece on March 27 from P194 each on March 21.

Golden Arches Development Corp. (GADC), the master franchiser of fastfood chain
McDonald’s in the Philippines, has been ramping up its nationwide store expansion as well,
capitalizing on the robust consumer spending.

At end 2016, McDonald’s was operating 520 branches in the Philippines, trailing
Jollibee’s 978-store footprint. The former is set to open 45 new stores this year -- higher than the
average of 30-40 outlets launched in recent years.

Cost increases will slow down this year compared with rates seen in the past two years as
a result of major investments in information technology and network development organization
as well as marketing.

JFC has delivered an annual return on equity ranging from 18-20% -- one the highest
among publicly listed companies -- over different economic cycles and the company expects to
sustain this.

“The Jollibee Group of Companies had faced many challenges in the past. It had emerged
stronger from these challenges and its profit recovered quickly,” JFC said.
Latest Developments

 Jollibee Foods Corporation is acquiring the master franchise holder of the Michelin-star
dim sum restaurant chain through a private equity fund investment

 Jollibee stocks suffer after DOLE order to regularize over 6,000 workers

 Jollibee to set foot in Europe

 JFC completes $350-M acquisition of CBTL

Latest Stock Price Chart

 Financials for the Past 3 years and revenue and earnings estimate for next 3 years

In Millions:

2016 2017 2018 2019 (6mos)

Revenue 113,811 133,613 161,199 43,673
Year on Year 12.93% 17.40% 20.65% 8.22%
Change in
Revenue (in %)

Gross Profit 20,543 23,481 26,762 6,692

Gross Profit % 17.08% 14.30% 13.97% 16.60%
OPEX 12,386 14,874 17,644 4,869
EBIT - -- 7,554 2,787
Interest 386 571 1,207 426
Taxes 2,719 1,667 1,677 462
Net Income 8,330 7,109 6,165 1,122
Net Income % 17.17% 15.32% 25.09% -26.91%

Current Assets 30,369 37,329 42,738 37,704

Total Assets 72,879 90,265 114,389 110,888

Current Liabilities 23,831 26,947 34,185 29,903
Total Liabilities 38,580 47,666 64,454 59,571
Common Stock 33,619 40,800 48,381 50,012
Retained Earnings 11,660 34,613 40,258 21,574
Total Equity 34,299 42,599 49,935 51,316
Cash 17,459 22,521 24,169 20,340
Current Price 200 255 295 234
Year on Year - 27.5% 15.69% -20.67%
Change in Price
(in %)
 Financial Ratios for the past 3 years and estimate for next 3 years

2016 2017 2018 2019

Debt to Equity 1.12 1.12 1.29 1.16
Ratio

Current Ratio 1.27 1.39 1.25 1.26

Quick Ratio - - - 0.99

Leverage Ratio - - - 2.22

Book Value/Share - - - 45.72

Fundamental Valuation
 Conclusion and Recommendation

Both excitement and fear inject our psychological behavior in trading when news about
plant expansion of our ideal company shows up. We tend to encapsulate different type of
behavior in terms of trading, others may panic while the others may take it as profit taking. But
what other doesn’t know fundamentally speaking is the intention of that parent acquiring another
entity. Is it for expansion? Is it a wise investment? Can they cope up the competitive scene and
cost in acquiring that investment?

Its highly recommendable to join at the bottom or at the midrange when news like
expansion goes out thus taking a minimal profit at the peak, why? Because people tend to be just
hyphened up about what happened, they think that its profitable, theoretically, but to the utmost
analyzation is its going for a downfall (JFC @ P230 to P275 and down to P220).

Nevertheless, JFC is a blue-chip company, thus investing to it for the long-run isn’t bad
at all. For the young kids out there that are passionate in trading, JFC being one of the blue chip
is highly recommended to invest with.