NYSE:YUMC

Stock Analysis Report

Executive Summary

Yum China Holdings, Inc. owns, operates, and franchises restaurants in China.

Rewards

Trading at 53% below its fair value

Earnings are forecast to grow 11.73% per year

Earnings grew by 0.7% over the past year

Risk Analysis

No risks detected for YUMC from our risk checks.


Snowflake Analysis

Flawless balance sheet with proven track record.


Similar Companies

Share Price & News

How has Yum China Holdings's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: YUMC has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-4.8%

YUMC

-11.4%

US Hospitality

-7.4%

US Market


1 Year Return

5.5%

YUMC

-4.5%

US Hospitality

10.5%

US Market

Return vs Industry: YUMC exceeded the US Hospitality industry which returned -4.5% over the past year.

Return vs Market: YUMC underperformed the US Market which returned 10.5% over the past year.


Shareholder returns

YUMCIndustryMarket
7 Day-4.8%-11.4%-7.4%
30 Day4.5%-7.7%-3.6%
90 Day-0.7%-7.3%-0.6%
1 Year6.4%5.5%-2.0%-4.5%12.8%10.5%
3 Year69.5%65.3%18.9%11.0%37.4%28.6%
5 Yearn/a30.7%16.7%61.3%43.6%

Price Volatility Vs. Market

How volatile is Yum China Holdings's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Yum China Holdings undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: YUMC ($43.81) is trading below our estimate of fair value ($93.15)

Significantly Below Fair Value: YUMC is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: YUMC is poor value based on its PE Ratio (23.2x) compared to the Hospitality industry average (21.5x).

PE vs Market: YUMC is poor value based on its PE Ratio (23.2x) compared to the US market (17.2x).


Price to Earnings Growth Ratio

PEG Ratio: YUMC is poor value based on its PEG Ratio (2x)


Price to Book Ratio

PB vs Industry: YUMC is overvalued based on its PB Ratio (5.4x) compared to the US Hospitality industry average (2x).


Next Steps

Future Growth

How is Yum China Holdings forecast to perform in the next 1 to 3 years based on estimates from 16 analysts?

11.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: YUMC's forecast earnings growth (11.7% per year) is above the savings rate (1.7%).

Earnings vs Market: YUMC's earnings (11.7% per year) are forecast to grow slower than the US market (13.2% per year).

High Growth Earnings: YUMC's earnings are forecast to grow, but not significantly.

Revenue vs Market: YUMC's revenue (6.6% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: YUMC's revenue (6.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: YUMC's Return on Equity is forecast to be high in 3 years time (21%)


Next Steps

Past Performance

How has Yum China Holdings performed over the past 5 years?

24.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: YUMC has high quality earnings.

Growing Profit Margin: YUMC's current net profit margins (8.1%) are lower than last year (8.4%).


Past Earnings Growth Analysis

Earnings Trend: YUMC has become profitable over the past 5 years, growing earnings by 24.5% per year.

Accelerating Growth: YUMC's earnings growth over the past year (0.7%) is below its 5-year average (24.5% per year).

Earnings vs Industry: YUMC earnings growth over the past year (0.7%) exceeded the Hospitality industry -8.2%.


Return on Equity

High ROE: YUMC's Return on Equity (23.4%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Yum China Holdings's financial position?


Financial Position Analysis

Short Term Liabilities: YUMC's short term assets ($2.3B) exceed its short term liabilities ($1.7B).

Long Term Liabilities: YUMC's short term assets ($2.3B) exceed its long term liabilities ($2.0B).


Debt to Equity History and Analysis

Debt Level: YUMC is debt free.

Reducing Debt: YUMC has not had any debt for past 5 years.

Debt Coverage: YUMC has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: YUMC has no debt, therefore coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: YUMC has a high level of physical assets or inventory.

Debt Coverage by Assets: YUMC's debt is not covered by short term assets (assets are -6.1x debt).


Next Steps

Dividend

What is Yum China Holdings's current dividend yield, its reliability and sustainability?

1.10%

Current Dividend Yield


Upcoming Dividend Payment

Purchase Yum China Holdings before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company1.1%marketbottom25%1.5%markettop25%3.9%industryaverage3.5%forecastin3Years1.2%

Current dividend yield vs market & industry

Notable Dividend: YUMC's dividend (1.1%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.52%).

High Dividend: YUMC's dividend (1.1%) is low compared to the top 25% of dividend payers in the US market (3.9%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, YUMC has been paying a dividend for less than 10 years.

Growing Dividend: YUMC's dividend payments have increased, but the company has only paid a dividend for 2 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (25.4%), YUMC's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: YUMC's dividends in 3 years are forecast to be well covered by earnings (23.6% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

1.9yrs

Average management tenure


CEO

Joey Wat (48yo)

1.9yrs

Tenure

US$10,486,376

Compensation

Ms. Joey Wat has been the Chief Executive Officer of Yum China Holding, Inc since March 1, 2018 and has served as its President and Chief Operating Officer since February 7, 2017 until February 2018 and se ...


CEO Compensation Analysis

Compensation vs Market: Joey's total compensation ($USD10.49M) is about average for companies of similar size in the US market ($USD10.82M).

Compensation vs Earnings: Joey's compensation has increased by more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Joey Wat
CEO & Director1.9yrsUS$10.49m0.015% $2.5m
Muktesh Pant
Vice Chairman & Senior Advisor1.9yrsUS$1.28m0.082% $13.5m
Danny Tan
Chief Supply Chain Officer3.3yrsUS$3.25m0.0066% $1.1m
Ka Wai Yeung
Chief Financial Officer0.3yrsno datano data
Xueling Lu
Controller & Principal Accounting Officer2.1yrsno datano data
Leila Zhang
Chief Technology Officer0yrsno datano data
Christie Ju
Vice President of Finance & Investor Relations0yrsno datano data
W. Chan
Chief Legal Officer0.7yrsno datano data
Alice Wang
Chief Public Affairs Officer2.9yrsno data0.0022% $363.2k
Steven Li
Chief Marketing Officer0yrsno datano data

1.9yrs

Average Tenure

48.5yo

Average Age

Experienced Management: YUMC's management team is not considered experienced ( 1.9 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Joey Wat
CEO & Director1.9yrsUS$10.49m0.015% $2.5m
Muktesh Pant
Vice Chairman & Senior Advisor1.9yrsUS$1.28m0.082% $13.5m
Christian Campbell
Director3.3yrsUS$181.25k0.014% $2.4m
Peter Bassi
Independent Director3.3yrsUS$181.25k0.015% $2.4m
Edouard Ettedgui
Independent Director3.3yrsUS$195.00k0.0060% $988.9k
Tung-Jung Hsieh
Independent Director3.3yrsUS$202.92k0.014% $2.4m
Rong Lu
Independent Director3.3yrsUS$181.25k0.0069% $1.1m
Zuliu Hu
Non-Executive Chairman3.3yrsUS$323.33k0.0071% $1.2m
Zili Shao
Independent Director3.3yrsUS$200.42k0.0059% $970.7k
Yiu Cheong Chan
Independent Director3.3yrsUS$181.25k0.0058% $964.1k

3.3yrs

Average Tenure

58yo

Average Age

Experienced Board: YUMC's board of directors are considered experienced (3.3 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Yum China Holdings, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Yum China Holdings, Inc.
  • Ticker: YUMC
  • Exchange: NYSE
  • Founded: 2016
  • Industry: Restaurants
  • Sector: Consumer Services
  • Market Cap: US$16.509b
  • Shares outstanding: 376.83m
  • Website: https://www.yumchina.com

Number of Employees


Location

  • Yum China Holdings, Inc.
  • Yum China Building
  • 20 Tian Yao Qiao Road
  • Shanghai
  • 200030
  • China

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
YUMCNYSE (New York Stock Exchange)YesCommon StockUSUSDOct 2016
0YUDB (Deutsche Boerse AG)YesCommon StockDEEUROct 2016
YUMC *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNOct 2016
0M30LSE (London Stock Exchange)YesCommon StockGBUSDOct 2016

Biography

Yum China Holdings, Inc. owns, operates, and franchises restaurants in China. The company operates in two segments, KFC and Pizza Hut. It operates restaurants under the KFC, Pizza Hut, Taco Bell, East Dawning, Little Sheep, and COFFii & JOY brands, which specialize in chicken, pizza, hot pot cooking, Chinese food, Mexican-style food, and coffee categories. The company also provides online food delivery services. It operates franchise restaurants under the KFC, Pizza Hut, Taco Bell, Little Sheep, East Dawning, and COFFii & JOY names. As of December 31, 2019, the company operated approximately 9,200 restaurants in 1,300 cities. Yum China Holdings, Inc. has a strategic cooperation framework agreement with the Shaanxi provincial government; collaboration with China Petrochemical Corporation (Sinopec) and China National Petroleum Corporation for the operation of franchised gas station restaurants; and strategic partnership with Universal Beijing Resort to jointly provide entertainment and dining experiences. Yum China Holdings, Inc. was incorporated in 2016 and is headquartered in Shanghai, China. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/26 01:52
End of Day Share Price2020/02/25 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.