Nomura wrote in a report that YUM CHINA (09987.HK)  -0.400 (-0.131%)    Short selling $24.85M; Ratio 29.857%   reported solid 1Q24 results, with net profit beating estimates thanks to resilient same-store sales growth (SSSG) and cost control, while overall SSSG declined 3% YoY. SSSG at KFC and Pizza Hut declined by 2% and 5% YoY respectively, due to higher customer traffic, partially offset by lower per-transaction value.

According to Nomura, YUM CHINA added a net 378 outlets in 1Q24. Among them, KFC and Pizza Hut added a net of 307 and 113 outlets respectively. Margin performance was better than expected, mainly due to the group's effective corporate-level cost control, with the general and administrative expense ratio was 4.7% in 1Q24, down 0.9 ppts compared with the same period last year. Restaurant operating margin was in line with the lower labour and occupancy costs, but also offset by higher food and paper costs.

In addition, Nomura outlined that YUM CHINA returned US$745 million to shareholders in 1Q24, including US$681 million in share buybacks and US$64 million in dividends. Summing up the above factors, the broker lowered its target price for H-shares of YUM CHINA from HK$456.3 to HK$455.52, with a Buy rating.

(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2024-05-17 16:25.)