China and US Equity Analyst

Roger Xie

10 year investment experience on public and private equity. Deep-dive fundamental research. Specialize in China and US market.

Yum China (YUMC and 9987.HK): Pizza Hut Recovered Faster than Market Expectation

Yum China (YUMC and 9987.HK): Accelerating New Store Openings to Improve Long-Term Profitability

Yum China (YUMC and 9987.HK): Short-Term Pressure Due to Resurge of COVID Cases in China

Yum China (YUMC and 9987.HK): Store Units Exceeding 10,000, Looking to Accelerate Expansion in 2021

Yum China (9987 HK): Simple Fare Trumps the Special Treat (6862 HK). What Now?

Yum China (YUMC and 9987.HK) Will Accelerate to Gain Market Shared Post COVID-19

Equity Bottom-Up

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<a href="https://www.smartkarma.com/entities/yum-china-holdings-inc" target="_blank" data-smartkarma-citation="entities:23677:1" rel="noopener">Yum China Holdings, Inc (YUMC US)</a> announced its strategic investment on <a href="https://www.smartkarma.com/entities/fujian-sunner-development-a" target="_blank" data-smartkarma-citation="entities:9168:1" rel="noopener">Fujian Sunner Development A (002299 CH)</a> and increase the equity interest to 5%. We estimate transaction price is about RMB 26.51/share for <a href="https://www.smartkarma.com/entities/fujian-sunner-development-a" target="_blank" data-smartkarma-citation="entities:9168:1" rel="noopener">Fujian Sunner Development A (002299 CH)</a> or 17x forward P/E. We believe the transaction valuation is favorable as poultry industry is facing downward pricing pressure due to the prolonged pandemic impact. </li>
<li>Founded in 1983 and headquartered in the Fujian Province, Sunner is China's largest white- feathered chicken producer. We estimate that Sunner is one of Yum China's largest poultry supplier and accounts more than half of its chicken supply. This strategic investment will enhance Yum China's supply chain security and strengthen the collaborations. We have highlighted in the investment theme: Yum China's capability to secure supply chain and distribution system make its wide moat in China restaurant industry.</li>
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<a href="https://www.smartkarma.com/entities/yum-china-holdings-inc" target="_blank" data-smartkarma-citation="entities:23677:1" rel="noopener">Yum China Holdings, Inc (YUMC US)</a> finished 2020 on a high note given its resilient business model. The system sale grew 5% in Q4 2020, and it operating profit grew 78% year-over-year given its consolidation of Huang Ji Huang. We believe Yum China is well positioned to weather the uncertainty post COVID. On the M&amp;A front, Yum China is committed to open 1000 new stores in 2021 and will seek for strategic opportunities to manage cost and drive efficiency improvement. The Fujian Sunner strategic investment bodes well for this principle. We continue to believe <a href="https://www.smartkarma.com/entities/yum-china-holdings-inc" target="_blank" data-smartkarma-citation="entities:23677:1" rel="noopener">Yum China Holdings, Inc (YUMC US)</a>  offers investor better reward/risk potential. </li>
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Yum China Holdings, Inc (YUMC US) announced its strategic investment on Fujian Sunner Development A (002299 CH) and increase the equity interest to 5%. We estimate transaction price is about RMB 26.51/share for Fujian Sunner Development A (002299 CH) or 17x forward P/E. We believe the transaction valuation is favorable as poultry industry is facing downward pricing pressure due to the prolonged pandemic impact. 
Founded in 1983 and headquartered in the Fujian Province, Sunner is China's largest white- feathered chicken producer. We estimate that Sunner is one of Yum China's largest poultry supplier and accounts more than half of its chicken supply. This strategic investment will enhance Yum China's supply chain security and strengthen the collaborations. We have highlighted in the investment theme: Yum China's capability to secure supply chain and distribution system make its wide moat in China restaurant industry.

Yum China Holdings, Inc (YUMC US) finished 2020 on a high note given its resilient business model. The system sale grew 5% in Q4 2020, and it operating profit grew 78% year-over-year given its consolidation of Huang Ji Huang. We believe Yum China is well positioned to weather the uncertainty post COVID. On the M&amp;A front, Yum China is committed to open 1000 new stores in 2021 and will seek for strategic opportunities to manage cost and drive efficiency improvement. The Fujian Sunner strategic investment bodes well for this principle. We continue to believe Yum China Holdings, Inc (YUMC US)  offers investor better reward/risk potential. 


Yum China (YUMC and 9987.HK): Strategic Investment in Sunner to Strengthen Supply Chain Management