In a report released yesterday, Anne Ling from Jefferies maintained a Buy rating on Yum China Holdings (YUMC – Research Report), with a price target of HK$513.53.
Anne Ling has given her Buy rating due to a combination of factors such as Yum China Holdings’ (YUMC) financial performance and strategic targets for 2024. The company’s adjusted operating profit (Adj. OP) for the first quarter of 2024 was reported at USD 374 million, reflecting a 1% increase year-over-year when excluding foreign exchange impacts, which aligns with management’s guidance. Despite the negative impact of currency fluctuations, YUMC demonstrated resilience with a modest rise in sales and a comprehensive share repurchase program.
Furthermore, Yum China’s key performance indicator, same-store sales (SSS), for KFC showed a decline of 2%, yet this was anticipated by Jefferies’ estimates and outperformed broader market expectations. Additionally, the firm’s aggressive expansion plan, which includes the opening of 1500-1700 new stores and significant capital expenditure, coupled with a commitment to returning USD 1.5 billion to shareholders through dividends and share repurchases, underpins Ling’s positive outlook. Despite some operational challenges, such as a dip in restaurant profit margins due to increased food costs, the company’s effective cost management strategies, particularly lower general and administrative expenses, have provided a counterbalance, supporting the Buy rating.
Ling covers the Consumer Cyclical sector, focusing on stocks such as Chow Tai Fook Jewellery Group, Haidilao International Holding, and Samsonite International SA. According to TipRanks, Ling has an average return of 2.6% and a 44.55% success rate on recommended stocks.
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Yum China Holdings (YUMC) Company Description:
Founded in 2016, Yum China Holdings, Inc. operates and franchises restaurants and fast food chains in China. The company operates through two segments: Kentucky Fried Chicken (KFC), and Pizza Hut.
