loveguli Yum China Holdings, Inc. (NYSE:YUMC) offers an attractive buying opportunity after good Q2 2024 results, and a significant cluster of insider buying activity in the days following the earning release. In this article, I will walk you through the different aspects of my investment thesis, and I will try to convey in the most direct way possible the different events that motivated my Strong Buy rating. Additionally, I will go through some of the headwinds in Q2 2024, especially their strategic ...

jetcityimage Summary Following my coverage of Yum China Holdings (NYSE:YUMC) in May'24, in which I recommended a buy rating as the business fundamentals continue to improve and I was optimistic about management’s strategy of opening new stores and growing same-store sales growth [SSSG], this post is to provide an update on my thoughts on the business and stock. I still give a buy rating for YUMC as it continues to demonstrate solid execution despite the weak macro environment, especially against peers. ...

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A recommendation upgrade from an analyst put the cap on an encouraging quarterly earnings report.Economic growth in China might not be what it once was, but certain imported businesses aren't doing too badly. Case in point: restaurateur Yum China Holdings (YUMC 0.80%), which recently posted quarterly earnings that cheered investors. They also inspired one analyst to upgrade her recommendation on the stock, helping to propel it to a nearly 16% week-to-date gain as of early Friday morning, according to data c ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _________________ Commission file number 001-37762 Yum China Holdings, Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware 81 ...

7 Aug 2024 CMB International Global Markets | Equity Research | Company Update Yum China (YUMC US) The best-in-class costs management in 2Q24 Sales growth was indeed a miss in 2Q24, but the net profit was a significant beat. For 2H24E, we are still very cautious about the demand and so as the level of competition. However, thanks to various efforts like Project Fresh Eye, Project Red Eye, rationalizing number of SKUs, more direct sourcing, and rampup of more profitable store formats (e.g. K-coffee and Pizza ...

Earnings & Revenue - Adjusted earnings per share of 55 cents beat the Zacks Consensus Estimate of 47 cents by 17%, with a 17% year-over-year increase [2] - Total revenues of $2.68 billion missed the consensus mark of $2.77 billion by 3.3%, but inched up 1% year-over-year [2] - Excluding foreign currency translation, revenues increased 4% year-over-year [2] - Total system sales (excluding foreign currency translation) increased 4% year-over-year, driven by an 8% net new unit contribution [2] - KFC system sales increased 5% year-over-year, while Pizza Hut system sales increased 1% year-over-year [2] - Same-store sales reached 96% of the previous year's level, with same-store transactions growing 4% year-over-year [2] Operating Performance - Total costs and expenses amounted to $2.413 billion, compared to $2.397 billion in the prior-year quarter [3] - Restaurant margin was 15.5%, down from 16.1% a year ago [3] - Adjusted operating profit totaled $266 million, up from $259 million a year ago [3] - Adjusted net income amounted to $212 million, compared to $199 million in the prior-year quarter [3] Balance Sheet & Shareholder Returns - Cash and cash equivalents were $1.043 billion as of Jun 30, 2024, down from $1.128 billion as of Dec 31, 2023 [4] - Net inventories were $362 million, compared to $424 million as of Dec 31, 2023 [4] - The company repurchased 5.1 million shares for $187 million in the second quarter [4] - As of Jun 30, the company had $666 million available for future share repurchases under the current authorization program [4] - A quarterly cash dividend of 16 cents per common share was declared, payable on Sep 17, 2024 [4] Unit Development & Digital Performance - Yum China opened 401 net new stores in the second quarter, bringing the total restaurant count to 15,423 [5] - KFC stores totaled 10,931, while Pizza Hut stores reached 3,504 [5] - Delivery contributed approximately 38% to KFC and Pizza Hut's company sales [5] - Digital orders accounted for about 90% of total company sales, with 89% for KFC and 93% for Pizza Hut [5] - Loyalty programs of KFC and Pizza Hut grew to more than 495 million members [5] 2024 Outlook - Yum China projects net new store openings to be in the range of 1,500-1,700 [6] - Capital expenditures are projected to be between $700 million and $850 million [6] Industry Updates - The Wendy's Company reported dismal second-quarter fiscal 2024 results, with earnings and revenues missing estimates, despite solid same-restaurant sales and digital sales momentum [7] - Shake Shack Inc posted decent second-quarter fiscal 2024 results, with earnings meeting estimates and revenues beating them, driven by product innovations and strategic menu pricing [8] - The Cheesecake Factory Incorporated reported second-quarter fiscal 2024 results, with earnings beating estimates and revenues missing them, benefiting from strong demand and new restaurant openings [9]

Yum posted strong margin expansion in its second-quarter report.Shares of Yum China (YUMC 11.83%) were moving higher today after the company reported better-than-expected results in its second-quarter earnings report, overcoming consumer weakness in China.As of 11:07 a.m. ET, the stock was up 13.2%. Yum China overcomes a low barThe Chinese operator of KFC and Pizza Hut said that same-store sales were down 4% in the quarter, but overall revenue increased 1% to $2.68 billion, driven by new store openings and ...

Financial Data and Key Metrics Changes - Yum China reported record levels of revenue, operating profit, and EPS for Q2 2024, with revenue of $2.68 billion, operating profit of $266 million, and diluted EPS of $0.55, marking a 19% increase year-over-year [4][22][27] - System sales grew 4% year-over-year, following a 32% growth in the same period last year, while core operating profit increased by 12% to $275 million [4][22] - Total transactions grew by 13%, and same-store transactions increased by 4% year-over-year [22] Business Line Data and Key Metrics Changes - KFC system sales increased by 5% year-over-year, with same-store sales at 97% of prior year levels, and same-store traffic growth of 4% [24] - Pizza Hut system sales rose by 1% year-over-year, with same-store sales at 92% of the prior year level, and traffic growth of 2% [24] - K-Coffee sales exceeded RMB 1 billion in the first half of 2024, up 26% year-over-year, with nearly 120 million cups sold, a 36% increase year-over-year [11][12] Market Data and Key Metrics Changes - The Eastern Power region in China remains the most resilient, with lower-tier cities recovering faster than higher-tier cities [39] - Residential locations are more resilient, while shopping centers are approaching pre-pandemic levels [39] Company Strategy and Development Direction - The company is focusing on operational efficiency through initiatives like Project Fresh Eye and Project Red Eye, which aim to improve cost structure and supply chain efficiency [7][8][10] - New business models such as K-Coffee and Pizza Hut WOW are being emphasized, with plans to expand these concepts significantly by year-end [10][16][28] - The company aims to maintain a balanced approach to pricing strategy, focusing on driving traffic while also offering higher ticket items [68] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging market conditions but emphasizes the importance of adapting and turning challenges into opportunities [40][62] - The company expects to continue investing in value for money and product innovations to drive transaction growth [28][62] - Management remains cautiously optimistic about the second half of the year, noting that while comparisons will be easier, the operating environment remains complex [58][62] Other Important Information - The company opened a record 779 net new stores in the first half of the year, reaching a total of 15,423 stores [29][30] - Yum China plans to return $1.5 billion to shareholders, having already returned nearly $1 billion in the first half [30] Q&A Session Summary Question: Insights on new business format and store concept - Management expressed excitement about the K-Coffee and WOW models, focusing on these two concepts for the remainder of the year, with initial results being encouraging [32][33] Question: Trends in same-store sales and market tier differences - Management noted that lower-tier cities are recovering faster than higher-tier cities, with residential locations showing resilience [39][40] Question: Margin details and cost structure - Management highlighted that proactive cost structure adjustments and operational efficiency initiatives have stabilized margins, with a focus on long-term structural changes [44][46][50] Question: Pricing strategy for KFC and Pizza Hut - Management confirmed a balanced approach to pricing, with a focus on driving traffic while maintaining a steady ticket average for KFC [68] Question: Consideration of disposing small businesses - Management is continuously reviewing the portfolio of smaller businesses and will make decisions based on efficiency and resource allocation [72]

Exhibit 99.1 Yum China Reports Second Quarter Results Record Second Quarter Revenue Led by Same-store Transaction Growth and New Unit Growth Improved OP Margin and Achieved Record Second Quarter Operating Profit Operating Profit Grew 4%, Core Operating Profit 1 Grew 12%, Diluted EPS Grew 17% Record First Half Openings of 779 Net New Stores and Cash Returns to Shareholders of Nearly $1 Billion Shanghai, China (August 5, 2024) – Yum China Holdings, Inc. (the "Company" or "Yum China") (NYSE: YUMC and HKEX: 998 ...