Yum! Brands China (09987. HK; YUMC. NY) released its fourth quarter and full year financial performance announcement this morning. Its Hong Kong stock market surged 28% in the morning and closed 14.48% higher at noon, with a transaction volume of HKD 273 million. According to its announcement, total revenue in 2023 will increase by 15% to $10.98 billion, or 21% (excluding the impact of foreign currency translation).
The company is the largest catering company in China. Its well-known brands include KFC, Pizzahut, Taco Bell, Little Sheep, Huang Jihuang, and Lavazza Coffee.
The following are the main contents of Yum! Brands China's 2023 financial report:
In 2023, operating profit increased by 76% to 1.1 billion US dollars. Core operating profit increased by 79%. Diluted earnings per share increased by 89% to $1.97. Excluding the adverse effects of special projects and the foreign currency conversion of $0.11, as well as the loss of $0.04 from the company's equity investment in Meituan valued at market value, the growth rate is 101%.
The adverse effects of foreign currency conversion on total revenue, operating profit, and diluted earnings per share were $589 million, $61 million, and $0.11, respectively.
The revenue from digital orders exceeds 9.2 billion US dollars, accounting for approximately 89% of the company's restaurant revenue.
Among them, the total number of members of KFC and Pizzahut exceeded 470 million, an increase of 14% over the same period of the previous year. Member sales accounted for about 65% of the sales of KFC and Pizzahut systems.
Plan to repurchase $1.25 billion of common stock in 2024
The board of directors announced a 23% increase in cash dividend per share of Yum! Brands China's common stock to $0.16, and will pay it to shareholders registered before the closing time on March 5, 2024, on March 26, 2024.
The company plans to repurchase $1.25 billion of common stock in the United States and Hong Kong through open market transactions in 2024. Mainly including
(i) In 2024, repurchase a total of $750 million of common stock in the United States under Section 10b5-1 of the U.S. Securities Exchange Act of 1934 and similar programs in Hong Kong;
(ii) Repurchase a total of $500 million of common stock in the United States in the first quarter of 2024 in accordance with Section 10b-18 of the Securities Exchange Act and through similar transactions in Hong Kong.
Goldman Sachs maintains a buy rating for Yum! China
Goldman Sachs released a report today stating that Yum China's revenue and profits continued to grow strongly in the previous quarter, with revenue increasing by 19% year-on-year, higher than the bank's expected 16%. Last quarter, same store sales increased by 4%, indicating a return to 85% of pre pandemic levels. As for last year, the company added a net of 1697 new stores, exceeding the guidance of 1400 to 1600 and the bank's expected 1605. In addition, the bank also stated that Yum! Brands China reported shareholders of approximately 390 million and 833 million US dollars in the fourth quarter and last year, exceeding the guidance range. The company's management has further improved its guidance on this year's goals. The bank believes that this is crucial in supporting stock prices in an unstable macro environment, and has rated it as "buy" with a target price of HKD 476 for the Hong Kong stock market and $61 for the US stock market.