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Equity Research Report
Jollibee Foods Corp. 24th April 2019
Published By CityU Student Research & Investment Club
Murtaza Salman Abedin Anirudh Ganeriwala Harsharan Singh Muhammad Salik Raymond Widjaja Tang Man Chung Tommy Fang Yucheng
THE FINAL PAGE OF THIS REPORT CONTAINS A DETAILED DISCLAIMER
The content and opinions in this report are written by university students from the CityU Student Research
& Investment Club, and thus are for reference only. Investors are fully responsible for their investment
decisions. CityU Student Research & Investment Club is not responsible for any direct or indirect loss
resulting from investments referenced to this report. The opinions in this report constitute the opinion of
the CityU Student Research & Investment Club and do not constitute the opinion of the City University of
Hong Kong nor any governing or student body or department under the University.
Rating OUTPERFORM
Price (22 April 19, PHP) 304.00 Target price (PHP)
% up from Price on April, 22: 18.58% 360.49
Market cap. (PHP, m) 333,621
Enterprise Value (PHP m) 337,271.4
Stock ratings are relative to the coverage universe in each
analyst's or each team's respective sector. Target price is for 12 months.
Research Analysts:
Murtaza Salman Abedin
+852 59858568
Anirudh Ganeriwala
Muhammad Salik
Harsharan Singh
Raymond Widjaja
Fang YuCheng
Tang Man Chung Tommy
Share price performance
Figure 1
24 April 2019
Asia Pacific/Philippines Equity Research
Restaurants
Jollibee Foods Corporation (JFC:PM)
Jollibee Foods Corporation (JFC) is an Asian food service multinational
company which owns and operates a large number of Quick Service
Restaurants (QSRs). The company is listed on the Philippines Stock
Exchange and has a market capitalization of PHP347.57 Billion (USD
6.72 Billion) and a revenue of PHP126.2 Billion (USD 2.43 Billion) as
of 2017. There are three major sources of revenue for the corporation
namely: food servicing, franchising and leasing.
JFC has a number of subsidiaries developing, operating and franchising
QSRs under different trade names. They also have subsidiaries and
affiliates which develop and operate its international brands inlcuding
Yonghe King, Hong Zhuang Yuan, San Pin Wang, and brands under
SuperFoods Group like Highlands Coffee and Pho 24.
JFC headquarters is located in Pasig, Philippines. The top five
shareholders of the firm are Hyper Dynamic Corp (25.11%), Honeysea
Corp (11.74%), Winall Holding Corp (4.98%), OppenheimerFunds Inc
(4.03%) and Honeyworth Corp. (3.7%.)
Figure2
TABLE OF CONTENTS
JOLLIBEE FOODS CORPORATION (JFC:PM) .......................................................................................... 3
COMPANY OVERVIEW ...................................................................................................................................... 5
BRAND ANALYSIS............................................................................................................................................................ 5 GROWTH ANALYSIS......................................................................................................................................................... 7 REGIONAL ANALYSIS ....................................................................................................................................................... 7
Asia – Pacific ......................................................................................................................................................... 8 North America and the Middle East ..................................................................................................................... 9
SMASHBURGER ACQUISITION......................................................................................................................... 11
FUTURE PLANS ............................................................................................................................................... 11
VALUATION ................................................................................................................................................... 12
INVESTMENT RISKS ........................................................................................................................................ 13
APPENDIX ...................................................................................................................................................... 14
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COMPANY OVERVIEW Brand Analysis
The following brands are owned by Jollibee Foods Corporation:
Figure 5
Jollibee Jollibee established itself in 1978, following which, it expanded its operations both domestically
and internationally. It currently dominates the QSR industry in Philippines and has achieved
double digit revenue growth between 2017 and 2018. The brand has opened 95 new stores in the
Philippines in 2017, raising its total store count to 1,062 (in Philippines.)
Greenwich JFC acquired Greenwich in 1994. The focused growth approach implemented by JFC resulted in
a total of 272 Pizzeria stores which increased its sales by over 11%.
Chowking Chowking is one of the most successful brands under JFC, which was acquired in 2000. It
expanded to other parts of the world like the USA and the Middle East. It is one of the fastest-
growing QSR brands in the young market segment. Worldwide, there are 571 stores of the brand.
Name of Brand
No. of Restaurants Growth Rate in branch
2015 2016 2017 numbers in 2017
Jollibee 1055 1145 1260 10.0%
Greenwich 231 250 272 8.8%
Chowking 484 521 571 9.6%
Red Ribbon 406 430 458 6.5%
Yonghe king 321 310 309 -0.3%
Hong Zhuang 42 43 43 0.0%
Mang Insal 460 465 495 6.5%
Burger King 56 75 93 24.0%
Dunkin Doughnuts 0 15 15 0.0%
Jinja Bar 3 0 0 -
San Pin Wang 59 0 0 -
Highlands Coffee 0 0 244 100.0%
PHO24 0 0 29 100.0%
Hard Rock Café 0 0 8 100.0%
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Red Ribbon JFC acquired Red Ribbon in 2005. In 2017, their sales grew by approximately 13.5% (YOY). The
brand has attained consistent double-digit revenue growth for the last five years. As of Dec 2017,
Red Ribbon has 458 stores in total.
Yonghe King In 2004, JFC acquired its first foreign brand in China: Yonghe King. In 2017, the sales of this
particular brand grew by 16.8% (YOY) and through such performance, JFC was able to increase
competition in the market. This is reflected by the fact that Yonghe King was acknowledged as
the best QSR in China for two consecutive years. By 2017 the total store count for Yonghe King
had increased to 309.
Hong Zhuang JFC acquired Hong Zhuang in 2008. One of the main drivers of the brand’s sales growth is the
provision of efficient delivery; Hong Zhuang was presented with the “2017 Remarkable Delivery
Brand” award. Such performance helped the brand increase its store tally by the end of 2017 to 43.
Mang Inasal JFC acquired Mang Inasal in April 2016. By April 2017, its sales grew by 15.2%(YOY). This
growth stemmed from the rising demand of its flagship products and unique strategy which offers
unilimited rice and soup and use of coal instead of electricity. 64 new stores were opened for this
brand raising the total store count to 495.
Burger King JFC has acquired a 54% stake in Burger King operations in the Philippines, a quick service
restaurant with a total of 93 restaurants in 2017.
Dunkin Doughnuts JFC bought the China Franchise of Dunkin Donuts. As of Dec 2017, there are 15 Dunkin Donuts
stores in China. JFC owns a 60% stake and aims to open a minimum of 1959 stores in China within
the next 20 years.
Jinja Bar JFC decided to exit Jinja Bar for USD1.6 million in Dec, 2016. Initially, Jinja Bar had six
restaurants out of which 3 were located in New Mexico.
Highlands COFFEE An agreement with Viet Thai International Joint Stock Co. stated that JFC will own 60% of the
franchise that operates Highlands Coffee in Vietnam. As of Dec 2017, there are 249 stores.
Highlands Coffee is planning for an IPO in Vietnam by 2019.
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PHO24 Pho 24 is a Vietnamese noodle house and was introduced in the Philippines in 2018 by JFC Fresh
N'Famous Foods Inc. Pho 24 also operates in Indonesia, Vietnam, Japan and Cambodia. The group
plans to build a brand of high quality and healthy Vietnamese food through Pho 24.
Hard Rock Cafe JFC currently owns a 50% stake in Hard Rock Cafe franchise stores in Vietnam, Macau and Hong
Kong.
Growth Analysis
During the year 2018, JFC invested USD186 million in capital expenditure. Most of the
expenditure was in opening new stores and renovation of existing stores as a result of which the
total store count increased by 19.1%. The Jollibee Foods Corporation opened 317 stores in the
Philippines and 185 stores abroad. They re-entered Malaysia and established themselves in 3 other
countries namely Italy, Macau and the UK. The group's worldwide store network reached 4,521
stores.
The company has continuously been making an effort to expand in North America and the EMEA
(Europe, Middle East and Africa) region. However, they have not made a public announcement
regarding the companies they will invest in.
They aim to open 150 new stores in Canada by the end of 2019. In December 2018, the group
purchased an additional 15% stake in Smashburger, raising its ownership stake to 100%. It also
bought a 47% stake in a Mexican restaurant chain, Tortas Frontera.
JFC has allotted over USD330 million for capital expenditure in 2019, which is double the amount
in 2018. The majority of the capital expenditure will be used to establish new stores and renovate
existing ones among other plans. The group hopes to reach its goal of 8,000 stores worldwide by
2022.
Regional Analysis
JCF’s current expansion strategy is to have equal revenue contribution from local and overseas
markets. Currently, the Philippines market contributes 70% of the company’s total annual sales
with overseas markets contributing the remaining 30%.
8 Copyright © CityU Student Research & Investment Club
Asia – pacific The Asia–Pacific fast food industry is predicted to show substantial growth until 2025 at an
estimated 5.8% CAGR and is expected to reach a market value of USD212 Billion. Jollibee Foods
Corporation (JFC), the largest Asian food service company, continues to lead the fast food market
in Philippines and has significant market share in countries such as Hong Kong and Vietnam. JFC
currently holds a 43% share of the Philippines fast food market. The Group has recorded consistent
double-digit percentage growth in sales over the past 10 years which averages to almost 14%
(YOY) by the end of 2017.
Figure 3
Jollibee is enhancing their presence in this region through acquisition of brands such as Burger
King Philippines and forming a joint-venture with Dunkin Donuts in China, and Highlands Coffee
in Vietnam. Jollibee has also entered the Hong Kong market and has opened 8 stores with plans to
expand in the future.
Analysis of the Countries in this region:
Philippines Jollibee was inspired from the open market street vendors and established in the Philippines in
1978 . Since then, Jollibee has been expanding their stores throughout Asia. JFC was holding
approximately a 43% share in the fast food market of Philippines (as of April, 2017) clearly
highlighting their dominance as a major market player. In 2017, Jollibee opened 95 new stores in
the Philippine market, which was its largest store growth since its inception, raising its total store
count to 1,062 stores.
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China The fast food industry growth in this region is essentially drawn from changes in consumer tastes
and preferences, an increasing working population and a rise in average working hours for the
general worker. China holds the largest market share of the region with its growing population and
rapid economic growth resulting in an increase in consumer income. Jollibee Foods Corporation
plans to increase its revenue coming from China but this will be a challenge given China’s rising
population, age structure, and growing trend towards organic and healthier options.
Hong Kong, China In 1996, Jollibee entered the Hong Kong market with its first branch in Central. Demand for
Jollibee from the Filipino and other communities present in Hong Kong’s rapidly growing
domestic worker market in recent years has paved the path for consistent growth.
Vietnam Jollibee entered the Vietnamese market in 1996 when Lotteria and KFC were the market leaders
with 222 stores and 140 stores respectively. Jollibee entered this market after KFC and managed
to capture a significant market share with 102 stores in this market as of December 2018.
Highlands Coffee, a JFC brand, plans to open more than 100 stores in Vietnam.
North America and the Middle East The North American region is predicted to show substantial growth in the fast food industry which
is estimated at 3.03% CAGR until 2021. The fast food market of the USA is valued at
approximately USD198.9 billion, which has attracted various fast food companies to make
investments in the USA. Likewise, Jollibee has also expanded into the US market to increase its
market share in this region. In this regard, Jollibee has acquired and started joint ventures with
various other food chains to penetrate the US market. They have also established outlets of their
other brands like Chowking and Red Ribbon in various US states.
According to company statistics, Chowking had opened 45 stores in the USA and Middle East and
Greenwich opened about 50 stores by 2017.
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The revenue distribution for the last four years is expressed below.
Figure4
During 2014, Jollibee sales rose significantly in the regions of Southeast Asia and the Middle East
by about 26%, and by 12.2% in the USA. The reason behind the growth in sales is attributed to the
successful promotion campaign of the company's flagship products (namely Chickenjoy and
Yumburger). This growth resulted in the opening of 3 new Jollibee stores in the USA and one new
store in the Kingdom of Saudi-Arabia.
In October 2015, the company decided to acquire 40% of the American fast-casual hamburger
chain: Smashburger for USD100.3 million (PHP 4.7 billion) and further increased its ownership
in 2018 to 100%. This takeover is expected to be positive for JFC as it provides a path to increase
its dominance in the American fast food market. According to the 2017 annual report, the North
American business has grown by 25.6%, an all-time high in the region.
Moreover, the Middle East business grew by 26.6%. In the Gulf countries, JFC achieved consistent
growth despite economic complications in the surrounding areas. For instance, in UAE, Jollibee
opened 4 new stores.
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SMASHBURGER ACQUISITION
Smashburger was founded in 2007 by two fast food industry veterans. In Oct 2015, JFC signed an
agreement with Smashburger to purchase equity in different phases. At that time, JFC bought 40%
of Smashburger and planned to purchase up to 35% between 2018 and 2021, and the remaining
25% between 2019 and 2026. However, two years later, the parties amended the terms that allowed
JFC to expand its ownership to 100% by Dec 2018.
In all, JFC has paid USD 218 Mn (PHP11.6 Billion) for the acquisition of Smashburger. This
acquisition will allow JFC to expand its operations and market share in the USA and other parts
of the world like Costa Rica, Egypt, EI Salvador, England, Scotland and Panama. As of Dec 2017,
the brand has more than 360 restaurants internationally, 32 of which opened in 2017. The company
plans to open 30 new franchises and corporate restaurants over the next year.
FUTURE PLANS Due to continuous growth in revenue, JFC aims to expand its operations in the coming years. They
plan on opening 30 Smashburger franchises and other chains. Simultaneously, JFC signed a joint
venture with Cargill Poultry Meats Production in Dec 2017 which will increase its processing
capacity to 45 million chickens per year, meeting the rising demand of JFC-owned brands.
Moreover, the group plans on establishing an additional 150 Jollibee stores in North America
during the next five years and 25 outlets in the United Arab Emirates by 2020.
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VALUATION
Our DCF valuation of Jollibee Foods Corp. gives us an implied share price of PHP 360.49
(USD 6.97) The forecast is for a 5-year period ranging from 2018E-2022E. The revenue
projections are driven by strong industry growth prospects and aggressive internal and external
expansion projects in the Asian & American markets. We have applied a WACC of 5.3% and
perpetual growth rate of 4.2% which remains constant. The perpetual growth rate was assumed to
be relatively high due to the fast food industry’s’ growth rate averaging roughly at 5.2 % and
expected to remain at a similar rate for the next 5 years. Additionally, the consistently high year-
on-year revenue growth averaging roughly 13.5 % over the past 10 years for Jollibee-Foods
corporation also demonstrates very high long- term growth potential for the company. Currently,
JFC is trading at PHP 306.00 (USD 5.92) and the 52-week range is from PHP 243.00 (USD4.7) -
PHP 328.40 (USD 6.35).
Figure 6
Figure 7
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INVESTMENT RISKS Jollibee Foods Corporation has a higher exposure to credit and liquidity risk since the principal
financing of the company consist of cash and cash equivalents. Moreover, Jollibee’s investments
in China and the USA might lead to foreign exchange risk due to the currency fluctuations
stemming from the US-China trade war.
At present, rapid growth in tech-based innovative solutions bears a certain competitive risk. Supply
Chain risk is another risk that is present in this industry.
Jollibee has various competitors around the world including McDonalds, Nandos and Popeyes.
Jollibee was the first to enter the market in the Philippines, however, it is now facing competition
from McDonald's and other competitors both at the local and international level that could reduce
their market share.
Given the nature of the business, quick service restaurant has a higher exposure to health safety
risk. Quick-service restaurants are expected to maintain high quality food, services and cleanliness
("FSC"). Therefore, investors have to constantly check that the law and guidelines enacted are
aligned with the company interest.
The assumptions are valid on the date of publishing. However, there are evolving risk and
uncertainties from the market, for example, the industry conditions, competition, future regulation
change, firm instability and legal risks which cannot be addressed in an as extensive manner.
14 Copyright © CityU Student Research & Investment Club
Appendix Figure 8
2014 2015 2016 2017 2018E 2019E 2020E 2021E 2022E
Cash Flow From Operating ActivitiesIncome Before Income Tax 6,759 6,435 7,730 8,340 9,654 10,756 12,068 13,563 15,223
Adjustments to reconcile net income to cash flows:
Depreciation and Amortization 3,186 3,426 3,996 4,745 6,755 8,151 8,307 9,247 9,676
Interest Expense 152 226 268 406 727 733 676 678 725
- - - (1,329) - - - - -
Impairment losses on:
Receivables 36 326 91 144 - - - - -
Inventories 11 11 79 7 - - - - -
Other assets - - - 123 - - - - -
Property, plant and equipment 2 - 43 432 - - - - -
Equity in net losses of joint ventures and an associate 126 189 337 283 - - - - -
Interest Income (242) (258) (287) (260) (260) (260) (260) (260) (260)
Deferred rent amortization net (24) 79 193 257 - - - - -
Stock options expense 166 173 241 227 - - - - -
Loss (gain) on divestment of subsidiaries and interest in joint venture - - (67) 116 - - - - -
Reversals of impairment losses on:
Receivables (1) (5) (3) (21) - - - - -
Inventories (8) (12) (18) (54) - - - - -
Property, plant and equipment (63) - (2) (2) - - - - -
Loss (gain) on disposals and retirements of:
Property and equipment 157 137 237 175 0 0 0 0 0
Investment properties - - - -231 - - - - -
Movement in Pension Liability 187 213 90 38
- - - 795 - - - - -
Net unrealized foreign exchange gain - (32) (79) (7) - - - - -
Loss (gain) on movement in derivative assets (Note 18) 3 - (3) 129 - - - - -
Income before working capital changes 10,450 10,908 12,845 14,313 16,877 19,380 20,792 23,229 25,364
Decreases (increases) in:
Receivables (4,329) 2,269 2,299 (533) (905) (646) (732) (873) (996)
Inventories (2,414) 494 (593) (715) (255) (1,161) (1,288) (1,437) (1,906)
Other assets (1,288) (1,511) 328 (230) - - - - -
Increases in trade payables and other current liabilities 1,795 2,976 1,865 2,176 1,599 3,475 4,241 5,312 6,064
Net cash generated from operations 4,213 15,137 16,744 15,011 17,315 21,048 23,012 26,230 28,526
Income taxes paid (1,668) (1,872) (2,262) (2,396) (2,626) (2,926) (3,283) (3,689) (4,141)
Interest received 213 220 278 225 225 225 225 225 225
Net Cash Flow provided by Operating Activities 2,758 13,485 14,760 12,840 14,915 18,347 19,955 22,766 24,611
(PHP in Millions of Philippine Piso except per share amounts)
Historical and Projected Cash Flow StatementProjected Fiscal Years Ending 31st December
Provisions
Gain from the re-measurement of the previously held interest
Cash Flow From Investing Activities
Acquisitions Of :
PPE (5,045) (4,597) (6,694) (8,905) (10,438) (11,830) (13,407) (15,288) (17,433)
Investments Properties (277) - - -
Interest in JointVentures (75) (5,058) (1,617) (531) (646) - - - -
Cash from aquired business/net of cash paid - - 113 105 - - - - -
intangible assets (319) (100) (24) (70) - - - - -
Minority Interest - - (2,070) - - - - - -
Market Entry fee - (94) - - - - - - -
Available for sale financial assets - - - - - - - - -
Advances to a joint Venture - - - (1,060) (5,219) - - - -
Dividends received from non controlling interests - - - 20 - - - - -
Proceeds from disposals of :
PPE 291 46 93 362 - - - - -
Investment Properties - - - 365 - - - - -
Subsidiaries/net - - 96 - - - - -
Decreases(Increases) in : - - - -
Short Term Investments - (922) 196 (687) - - - - -
Interests in and advances to Joint Ventures, Co Ventures and Associates - - - 338 - - - - -
Other Non-Current Assets (271) (89) (171) (482) - - - - -
Net Cash Flow Used In Investing Activities (5,696) (10,814) (10,077) (10,545) (16,303) (11,830) (13,407) (15,288) (17,433)
Cash Flow from Financing Activities
Payments of :
Cash Divdends (1,561) (1,900) (1,988) (2,347) (2,574) (2,868) (3,218) (3,617) (4,059)
Long Term Debt (1,097) (734) (930) (1,608) (1,559) (3,644) (1,969) (3,444) (1,616)
Short Term Debt - (9,191) (282) - - - - - -
Liability for acquisitions of business (110) (88) (95) - - - - - -
Proceeds From :
Long term Debt 1,054 5,177 2,994 5,517 4,300 2,825 2,825 2,825 2,825
Issuance of/and subscriptions to capital stock 657 435 369 861 - - - - -
Short term debt 1,865 7,594 - -
Contributions from non controlling interests - 178 716 15 - - - - -
interest paid (123) (189) (233) (361) (446) (350) (345) (307) (115)
Dividends paid to non controlling interests (40) (64) - - - - - - -
Net Cash Flow (used in) provided by Financing Activities 645 1,219 551 2,077 167 (3,687) (2,362) (4,236) (2,850)
Increase(decrease) in cash & cash equivalents (2,294) 3,890 5,234 4,373 (1,222) 2,830 4,185 3,242 4,327
FX Effects on Cash & Cash Equivalents 6 (11) 2 (2) - - - - -
Beginning cash balance 9,904 7,616 11,495 16,730 21,101 19,879 22,709 26,894 30,136
Ending cash balance 7,616 11,495 16,730 21,101 19,879 22,709 26,894 30,136 34,463
15 Copyright © CityU Student Research & Investment Club
Figure 9
Historical and Projected Statement of Financial position
2014 2015 2016 2017 2018E 2019E 2020E 2021E 2022E
Balance Sheet Assets
Current Assets
Cash & equivalents 7,618 11,498 16,733 21,107 19,879 22,709 26,894 30,136 34,463
Short Term Investments - 922 726 1,413 1,413 1,413 1,413 1,413 1,413
Recievables 7,937 5,433 3,377 3,941 4,846 5,493 6,225 7,098 8,094
Inventories 5,972 5,478 5,987 6,836 7,090 8,251 9,539 10,976 12,882
Derivative Asets - 10 - - - - - - -
Other Current Assets 2,494 3,828 3,545 3,844 3,844 3,844 3,844 3,844 3,844
Total Current Assets 24,021 27,169 30,369 37,141 37,072 41,709 47,914 53,467 60,697
Non Current Assets
Available for sale Financial Assets 21 21 26 30 30 30 30 30 30
Interests in and advances to Joint Ventures, CoVentures and Associates 3,389 8,449 9,873 7,493 13,239 13,239 13,239 13,239 13,239
PPE 13,364 14,547 16,656 20,894 26,046 30,313 34,403 40,544 48,300
Investment Properties 1,026 998 983 849 849 849 849 849 849
Goodwill and other Intangibble Assets 9,385 9,412 9,087 15,730 15,730 15,730 15,730 15,730 15,730
Operating Lease Recievables 21 13 26 28 28 28 28 28 28
Derivative Assets - 75 78 12 12 12 12 12 12
Deferred Tax Assets 752 1,408 2,585 3,909 3,909 3,909 3,909 3,909 3,909
Other Non Current Assets 2,140 2,670 3,045 3,698 3,698 3,698 3,698 3,698 3,698
Total Non Current Assets 30,097 37,594 42,360 52,643 63,541 67,808 71,898 78,039 85,795
Total Assets 54,119 64,763 72,728 89,784 100,613 109,517 119,812 131,506 146,492
Projected Fiscal Years Ending 31st December
(PHP in Millions of Philippine Piso except per share amounts)
Current Liabilities
Trade payables and other current liabilities 16,296 19,527 21,961 25,255 26,853 30,328 34,569 39,881 45,944
Income tax payable 182 236 309 224 309 344 386 434 487
Short-Term Debt 1,865 282 - - - - - - -
Current portion of -
Long-Term Debt 716 928 1,562 1,216 1,837.29 1,682 2,198 2,027 2,034
Liability for Acquisition of Businesses 33 95 - - - - - - -
Total Current Liabilities 19,091 21,068 23,831 26,695 28,999 32,354 37,153 42,342 48,465
Noncurrent Liabilities
Noncurrent portion of
Long-Term Debt 4,428 8,791 10,594 14,901 18,183 18,316 16,895 16,949 18,113
Liability for Acquisition of Businesses 101 - - - - - - - -
Pension liability 832 1,467 1,658 1,490 1,490 1,490 1,490 1,490 1,490
Operating lease payables 1,545 1,616 1,793 2,052 2,486 2,666 3,147 3,363 3,953
Derivative liability 2 35 34 51 51 51 51 51 51
Provisions 31 31 31 825 825 825 825 825 825
Deferred tax liabilities - net 11 - 507 1,189 1,189 1,189 1,189 1,189 1,189
Total Noncurrent Liabilities 6,950 11,938 14,616 20,507 24,223 24,536 23,596 23,867 25,621
Total Liabilities 26,041 33,006 38,447 47,202 53,223 56,890 60,749 66,209 74,087
Equity Attributable to Equity Holders of the Parent
Capital stock 1,081 1,086 1,091 1,084 1,084 1,084 1,084 1,084 1,084
Subscriptions receivable (17) (17) (17) - - - - -
Additional paid-in capital 4,452 5,055 5,660 7,520 7,520 7,520 7,520 7,520 7,520
Cumulative translation adjustments of foreign subsidiaries (26) 107 (21) 340 - - - - -
Remeasurement loss on net defined benefit plan - net of tax (220) (537) (609) (462) (462) (462) (462) (462) (462)
Unrealized gain on change in fair value of available-for-sale financial assets - - 4 7 7 7 7 7 7
Comprehensive loss on derivative liability (2) (35) (34) 12 12 12 12 12 12
Excess of cost over the carrying value of non-controlling interests acquired (543) (543) (2,152) (2,152) (2,152) (2,152) (2,152) (2,152) (2,152)
Retained earnings
Appropriated for future expansion 10,200 10,200 18,200 18,200 18,200 18,200 18,200 18,200 18,200
Unappropriated 12,446 15,487 11,660 16,413 21,562 26,799 33,235 39,469 46,577
27,371 30,804 33,783 40,963 45,772 51,009 57,445 63,679 70,786
Cost of common stock held in treasury (181) (181) (181) (181) (181) (181) (181) (181) (181)
27,190 30,623 33,602 40,783 45,591 50,828 57,265 63,498 70,606
Non-controlling Interests 888 1,133 679 1,799 1,799 1,799 1,799 1,799 1,799
Total Equity 28,078 31,757 34,281 42,582 47,391 52,627 59,064 65,297 72,405
Total Liabilities & Equity 54,119 64,763 72,728 89,784 100,613 109,517 119,812 131,506 146,492
LIABILITIES
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investments and services contained or referred to in this report may not be suitable for you and it is
recommended that you consult an independent investment advisor if you are in doubt about such investments
or investment services. This report does not constitute any form of legal, investment, taxation, or accounting
advice, nor does this report constitute a representation that any specific investment or investment strategy is
suitable or appropriate to your individual circumstances, nor does this report constitute a personal
recommendation to you. Information and opinions presented in this report have been obtained from or derived from
sources which the Club believes to be reliable and appropriate but the Club makes no representation as to their
accuracy or completeness. The Club accepts no liability for loss arising from the use of the material presented in
this report. Due attention should be given to the fact that this report is written by university students. This
report is not to be relied upon in substitution for the exercise of independent judgement. The Club may have issued in
the past, and may issue in the future, other communications and reports which are inconsistent with, and reach different
conclusions from, the information presented in this report. Such communications and reports represent the different
assumptions, views, and analytical methods of the analysts who prepared them. The Club is not under an obligation
to ensure that such communications and reports are brought to the attention to any recipient of this report. This report,
and all other publications by the Club do not constitute the opinion of the City University of Hong Kong, nor
any governing or student body or department under the University aside from the Club itself. This report may
provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the report refers to website
material of the Club, the Club has not reviewed any such website and takes no responsibility for the content contained
therein. Such addresses or hyperlinks (including addresses or hyperlinks to the Club’s own website material) is
provided solely for your own convenience and information and the content of any such website does not in any way
form part of this Report. Accessing such website or following such link through this report shall be at your own risk.
Past performance should not be taken as a guarantee of future performance, and no representation or warranty, express
or implied, is made regarding future performance. Information, opinions and estimates contained in this report reflect
a judgement at its original date of publication and are subject to change without notice. The price, value of, and income
from any of the financial instruments mentioned in the report can fall as well as rise. The value of financial instruments
are subject to exchange rate fluctuation that may have a positive or negative effect on the price or income of such
financial instruments. Some investments discussed in this report may have a high level of volatility. High volatility
investments may experience sudden and large falls in their value causing losses when that investment is realised.
Those losses may equal your individual investment. In the case of some investments, the potential losses may exceed
the amount of initial investment and, in such circumstances, you may be required to pay more money to support those
losses. Income yields from investments may fluctuate and, in consequence, initial capital paid to make the investment
may be used as part of that income yield. Some investments may not be readily realisable and it may be difficult to
sell or realise those investments. Similarly, it may prove difficult for you to obtain reliable information about the
value, or risks, to which such an investment is exposed.