Yum China Shares Rise on Fourth-Quarter Earnings Beat

By Amanda Lee

Yum China shares rose in early trading in Hong Kong after the restaurateur's quarterly results beat expectations, helped by new store openings and higher consumption activity, and said it would step up plans for buybacks in 2024.

Shares were up 14.5% to HK$332.00 at midday Wednesday, bringing shares into the green for the year.

Yum China said before markets opened that its fourth quarter net profit rose 81% on year to US$97 million, beating a median analyst estimate of US$61.9 million in a FactSet poll. The bottom line was helped by sales that rose 19% on year to US$2.49 billion--beating in a FactSet poll of US$2.32 billion.

The company opened 542 net new stores in the quarter. It also highlighted plans to step up buybacks, boost its cash dividend, and open up to 1,700 new stores in China this year.

Jefferies analysts Anne Ling and Lisa Liao said in a research note that the bottom line came in far higher than they expected, helped by a lower-than-expected tax rate and investment loss. A 23% rise in dividend was "a nice positive surprise," they added. Jefferies kept a buy rating with a target price of HK$510.70.

Citi analysts Xiaopo Wei and Brian Cho said in a note that the results dispelled market concerns on margin pressure from competition. Citi has a buy rating with a target price of HK$573.56 on the stock.

Write to Amanda Lee at amanda.lee@wsj.com

(END) Dow Jones Newswires

February 06, 2024 23:57 ET (04:57 GMT)

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