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Research Alert: CFRA Maintains Hold Opinion On Shares Of Yum China

· 02/04/2021 17:32

10:30 PM EST, 02/04/2021 (MT Newswires) -- CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:

Our 12-month target price of USD55 implies a 2021 P/B of 4.3x, at a slight discount to Yum China's (YMC) historical average (traded independently since the spin-off from its parents in 2016), to price in the short-term slowdown in dine-out traffic and limited dine-in capacity amid Covid-19 volatility. Besides, we think the increasing trend of healthy eating in China may weigh on YMC's core fast-food businesses, while the rising competition from Chinese fast-food brands (e.g., Lao Xiang Ji, Dicos, Kungfu, and Country Style Chicken) may dampen YMC's popularity in China, given the consumer loyalty toward the local economy, particularly as the U.S.-China relationship deteriorates. Nevertheless, we see the improved resource allocations to support YMC's constant tweaks and innovations in its localized menu offerings across city tiers to drive new sales, and loyalty programs to retain customers. We keep our 2021 EPS forecast of USD2.39 and introduce an EPS estimate of USD2.72 for 2022.