Yum China: China Exposure Risks, Margins Under Pressure

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About: Yum China Holdings, Inc. (YUMC)
by: Investing Hobo
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Investing Hobo
Long/short equity, value, contrarian, solar
Summary

Yum China's revenue growth has almost been entirely linked to its aggressive 8-10% annual store count expansion which may not be sustainable indefinitely.

Yum China's seemingly respectable 4% same store sales growth have not even been sufficient to cover inflation and thus resulted in continued margin compression.

Increasing trade tensions between the US and China raise investment risks for US investors since all of the Yum China's physical equity is based in China.

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(Image from YUMC's second quarter earnings presentation.)

The second quarter of 2019 was not much different