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<Research>G Sachs Mildly Trims Earnings Forecasts for YUM CHINA; Mgmt's Decision Not to Raise Results Guidance Triggers Negative Mkt Reaction
Recommend 4 Positive 5 Negative 3 |
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YUM CHINA (09987.HK) (YUMC.US) delivered in-line 1Q25 results that offered positive surprises with same-store sales growth stabilizing YoY and restaurant margins improving, though these gains were offset by a slower pace of new store openings and slightly weaker-than-expected per-store sales, Goldman Sachs opined in its report. YUM CHINA's overall business strategy, as well as its guidance for full-year new store openings, system sales growth, and profit margins remain unchanged. In Goldman Sachs' opinion, the negative reaction to YUM CHINA's share price after the results announcement reflected slower quarterly revenue growth and management's decision not to raise full-year guidance despite enhanced same-store sales growth and margin trends. Management also highlighted overall demand uncertainty and likely smaller margin improvement for the rest of the year. Due to the dilution of per-store sales from small-sized stores, Goldman Sachs mildly trimmed its 2025-27 net profit forecasts for YUM CHINA by 1-4%, while reducing its target price from $452 to $447, with a Buy rating remaining in place. AAStocks Financial News |
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