In a report released yesterday, Chen Luo from Bank of America Securities reiterated a Buy rating on Yum China Holdings, with a price target of $56.50.
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Chen Luo has given his Buy rating due to a combination of factors that highlight Yum China Holdings’ strong financial performance and strategic initiatives. The company reported a notable increase in operating profit margin, which rose by 1% year-over-year, driven by effective cost control measures. This improvement in margins, alongside the first positive same-store sales growth in six quarters, underscores Yum China’s operational resilience.
Moreover, Yum China has adjusted its guidance for the second half of the year, indicating a slight upward trend in operating profit margins and a reduction in capital expenditures. The company also plans to maintain a mid-single-digit growth in system sales and has committed to a significant capital return to shareholders, which is expected to yield around 5%. These strategic moves, combined with the company’s track record of prudent guidance, contribute to Chen Luo’s positive outlook on Yum China’s stock, viewing any market pullbacks as attractive investment opportunities.
In another report released today, DBS also reiterated a Buy rating on the stock with a HK$480.00 price target.