Yum China

V

vanzandt

YUMC
Down big today. KFC doing well. Pizza Hut not so good.
Pretty strong balance sheet. And Pizza Hut did improve significantly. Good management team. 300 Million buyback in place. They bought a million shares last quarter north of $37. It just hit $34.61.... thats probably a good entry to get your feet wet... give or take. $34.25 would be the goal to get in. It'll probably see that today or tomorrow.
 
Despite the fact I think its a decent long term play, there's usually a good reason for a sell-off like yesterday on that kind of volume.

I suspect today is a bit of a dead cat bounce on short covering. Those who went long yesterday are probably going to take that nice fat profit and run. I think it will see the $34's again shortly.

$37.60 was the days high lol... I didn't cheat. Look at the timestamp. If it goes above that I'll short more with a stop at $37.95. So far so good. Expecting it to drop significantly after 3PM today.
 
Watch the fireworks start here in a few.... its either gonna explode up.... or drop like a rock.
I cover at $37.60 and call it a week if it heads up.
 
" Yum China Holdings, Inc. is a licensee of Yum! Brands in mainland China. Yum China has exclusive rights in mainland China to KFC, China’s leading quick-service restaurant concept, Pizza Hut, the leading casual dining brand, and Taco Bell, which is expanding globally and opening in China in 2016. It also owns the Little Sheep and East Dawning concepts. Yum China has more than 7,300 restaurants and more than 400,000 employees in over 1,100 cities, and generated over $8 billion in system sales in 2015."

Looks like a great long-term-hold. China wants more and more western foods. Huge customer base, low overhead, and an increasingly-growing population (think porking like rabbits). Not sure about the short-term prospects, but damn it looks like a great buy-and-hold.
 
Overnight said:
" Yum China Holdings, Inc. is a licensee of Yum! Brands in mainland China. Yum China has exclusive rights in mainland China to KFC, China’s leading quick-service restaurant concept, Pizza Hut, the leading casual dining brand, and Taco Bell, which is expanding globally and opening in China in 2016. It also owns the Little Sheep and East Dawning concepts. Yum China has more than 7,300 restaurants and more than 400,000 employees in over 1,100 cities, and generated over $8 billion in system sales in 2015."

Looks like a great long-term-hold. China wants more and more western foods. Huge customer base, low overhead, and an increasingly-growing population (think porking like rabbits). Not sure about the short-term prospects, but damn it looks like a great buy-and-hold.
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Yeah its pretty solid. I like the balance sheet. Here's the CC transcript. https://seekingalpha.com/article/40...pant-q2-2017-results-earnings-call-transcript

Good discussion about Pizza Hut. They bought an on-line delivery service too.

Here's what I can't figure this out....I think the ENTIRE country of China has one Taco Bell that opened in January.
No mention whatsoever in the CC unless I missed it. Maybe they're holding back. That could be a HUGE growth opportunity going forward I would think.
 
vanzandt said:
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Here's what I can't figure this out....I think the ENTIRE country of China has one Taco Bell that opened in January.
No mention whatsoever in the CC unless I missed it. Maybe they're holding back. That could be a HUGE growth opportunity going forward I would think.
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"Yum China Holdings, which owns the new restaurant, said it has "thoroughly researched and fine-tuned the Taco Bell menu for China.""

Investing in Yum Brand China, I'd take their great growth in KFC stuff and let the Taco Bell brand ride the wave, since the consensus seems to be that Tex-Mex whatever flavors have not yet caught on in China.

So if you take the safe bet in investing in the growth of the brands that are working, you are risking a small amount of the portfolio to see if the Taco Bell brand will work there, while the mainstays are generating huge returns. Seems a safe bet with minimal downside.
 
I live in China, here are my thoughts....

KFC should continue to grow steadily, it's always packed. Chinese people don't want Western food, they want the Western level of service and supposed safety/cleanliness. So, apart from the original chicken (which nobody eats) the menu is completely different, with super spice, grease and MSG, even more than the USA.

Chinese people don't like Western food, and they care even less about Mexican food. If they update the Taco Bell menu with super spice/grease/MSG, then they are just competing in the same space as KFC, which is already built everywhere. "I want to eat some Mexican food today" said no Chinese person ever. For them, KFC and Taco Bell will be the same.

Pizza Hut... the market for overpriced, bad pizza is dying.... they slashed prices, and seems also slashed the staff, the service and cleanliness is going down the tubes. Now other Chinese or foreign brands are easily a better choice. On the cheap end, there is Saizeriya from Japan, growing like crazy, menu is literally 1/3 the price and food arrives in 5-10 minutes, instead of waiting 30 minutes at Pizza Hut. On the more expensive end, there are a lot of places popping up where you can get a much better $20 pizza than Pizza Hut.
 
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promagma said:
I live in China, here are my thoughts....

KFC should continue to grow steadily, it's always packed. Chinese people don't want Western food, they want the Western level of service and supposed safety/cleanliness. So, apart from the original chicken (which nobody eats) the menu is completely different, with super spice, grease and MSG, even more than the USA.

Chinese people don't like Western food, and they care even less about Mexican food. If they update the Taco Bell menu with super spice/grease/MSG, then they are just competing in the same space as KFC, which is already built everywhere. "I want to eat some Mexican food today" said no Chinese person ever. For them, KFC and Taco Bell will be the same.

Pizza Hut... the market for overpriced, bad pizza is dying.... they slashed prices, and seems also slashed the staff, the service and cleanliness is going down the tubes. Now other Chinese or foreign brands are easily a better choice. On the cheap end, there is Saizeriya from Japan, growing like crazy, menu is literally 1/3 the price and food arrives in 5-10 minutes, instead of waiting 30 minutes at Pizza Hut. On the more expensive end, there are a lot of places popping up where you can get a much better $20 pizza than Pizza Hut.
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Wow. Thats some great Good Peter Lynch style insight you shared. Thnx.
Its complicated to figure this stock out. How they're tied to YUM, currency exchanges, etc.
After I read your post I went back to see if they mentioned same store sales in regards to Pizza Hut. They conveniently didn't. It might be in their SEC filings, I'm gonna look.

One thing here....Do you think your opinion is the prevailing sentiment? Sometimes its easy to put ones own personal perspective out front. I mean there are people that if you asked them they would say they would never eat at a McDonalds. I like to attempt to take it all in and put myself in the shoes of others when evaluating the bigger picture, ignoring my own jadedness. There was an article several months ago I read that confirms what you said about Mexican food in China. I wrote it off as just some opinionated staffer at Motley Fool but your observations if correct are great to hear.

Thanks again... it might be a great short. Like I said, there's usually a reason for a 16% drop on 5 times the normal volume. Yesterday might very well have been just a dead cat bounce. This thing IPO'd in January around $21 I believe. There's a lot of room to fall. It could be a great money maker short if what you say is true.
 
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