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<Research>JPM Lowers TP of Yum China (YUMC.US) to US$37, Rates Neutral
Recommend 2 Positive 4 Negative 1 |
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JPMorgan remarked in a report that while Yum China (YUMC.US) achieved notable 1Q24 results that included a 6% YoY increase in system sales, a 1% YoY rise in core operating profit and a consensus-beating 4% YoY growth in EPS, its shares plummeted 10% in the US and 9% in Hong Kong in the two trading days after the results were released. The broker believed the market is concerned about Yum China's profitability sustainability because same-store sales have declined and profitability has been eroded due to the failure of new customers to offset the decline in the average price per transaction. In most cases, this has also forced the leading retailers to open new outlets, leading to increased competition and lower industry margins. While JPM considered the short-term concerns to be valid, it remained bullish on the long-term outlook. The broker lowered its profit forecast for Yum China from this year to 2026 by 3-5%, lowered its US-share target price from US$40 to US$37, and maintained its Neutral rating. AAStocks Financial News |
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