SHANGHAI - Yum China Holdings (NYSE:YUMC), Inc. (NYSE: YUMC and HKEX: 9987), a leading restaurant company in China, has announced its intention to return at least $3 billion to shareholders from 2024 to 2026 through dividends and share repurchases. This plan includes a commitment of $1.5 billion for the year 2024.
The announcement was made in conjunction with the release of CEO Joey Wat's annual letter to stockholders and the company's 2023 Annual Report. Wat highlighted the company's strong performance in 2023, describing it as "one of our strongest ever," and credited the company's 430,000 employees for their role in Yum China's success.
In 2023, Yum China returned a record $833 million to investors, which represented 75% of its annual operating profit. The company's growth strategy includes expanding its presence to 20,000 stores nationwide by 2026, an increase from over 14,000 restaurants currently operating across more than 2,000 cities in China. This expansion aims to extend the company's reach to about 700 million people.
Wat emphasized the potential of the China market, noting that more than half of Yum China's new stores have been opened in lower-tier cities, which are seeing an uptick in consumer spending. The CEO also pointed out the company's strong operational capabilities, customer care, supply chain, and technological advancements as key factors in its sustained success.
Yum China operates several well-known brands, including KFC, Pizza Hut, Taco Bell, Little Sheep, Huang Ji Huang, and a partnership with Lavazza to develop the coffee concept in China. It is noted for its digital capabilities and a loyalty program that enhances customer service.
The company's forward-looking statements, as defined by securities law, suggest continued growth and returns for shareholders, though they are subject to inherent risks and uncertainties.
The information provided in this article is based on a press release statement from Yum China Holdings, Inc.
InvestingPro Insights
As Yum China Holdings, Inc. (NYSE: YUMC and HKEX: 9987) pledges to enhance shareholder value through dividends and aggressive share repurchases, the company's financial health and market performance offer a deeper insight into its capabilities to fulfill these commitments.
Yum China, a prominent player in the Hotels, Restaurants & Leisure industry, not only holds more cash than debt on its balance sheet but also displays a strong financial discipline that can be seen in its ability to maintain dividend payments for 8 consecutive years.
InvestingPro data shows Yum China with a market capitalization of $15.12 billion and a P/E ratio that stands at a competitive 19.42, adjusted to 17.2 for the last twelve months as of Q4 2023. This valuation comes in light of the company's revenue growth, which was a robust 14.72% for the same period, underpinning the company's operational success.
Moreover, the company's PEG ratio, which is a measure of the stock's valuation relative to its earnings growth, is notably low at 0.2, indicating potential undervaluation in terms of near-term earnings growth.
InvestingPro Tips suggest that Yum China's management has been proactively buying back shares, a sign of confidence in the company's prospects. Moreover, the company's cash flows have been strong enough to sufficiently cover interest payments, providing a cushion against financial distress.
For investors seeking more detailed analysis and additional InvestingPro Tips, there are 9 more tips available on Yum China's financial health and stock performance, which can be accessed at Investing.com/pro/YUMC. To dive deeper into these insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Despite recent stock price volatility, with a six-month total return of -29.77%, analysts predict that Yum China will remain profitable this year, as evidenced by its profitability over the last twelve months. With the next earnings date set for April 29, 2024, investors will be keen to see if the company's growth trajectory aligns with the strategic initiatives outlined by CEO Joey Wat.
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