YumChina (NYSE:YUMC)

[SBQ]

Snoopy..

How's that CoronaVirus doing to YumChina? It's ok i'll post the new for you:

https://edition.cnn.com/2020/02/05/b...rus/index.html

"Yum China, which operates KFC, Taco Bell and Pizza Hut in the country, warned that the deadly coronavirus will hurt its business this year. "As a result of the outbreak, the company may experience operating losses for the first quarter of 2020," the company said in a statement discussing 2019 financial results."

Are you buying more?

[Snoopy]

Snoopy..

How's that CoronaVirus doing to YumChina? It's ok i'll post the new for you:

https://edition.cnn.com/2020/02/05/b...rus/index.html

"Yum China, which operates KFC, Taco Bell and Pizza Hut in the country, warned that the deadly coronavirus will hurt its business this year. "As a result of the outbreak, the company may experience operating losses for the first quarter of 2020," the company said in a statement discussing 2019 financial results."

Are you buying more?

Share price closed at $42.71 down over a dollar almost exactly line ball with a year ago! Not great news but hardly a collapse. Google is showing a PE of 23. I have a decent helping of these so not going out of my way to buy more. However, after problems trying to cash my US dividend cheques in NZ I have joined the YUMC Dividend Reinvestment Plan. So the answer to your question is 'yes' as a result of that. I am not buying in a significant way though.

SNOOPY

[ratkin]

Share price closed at $42.71 down over a dollar almost exactly line ball with a year ago! Not great news but hardly a collapse. Google is showing a PE of 23. I have a decent helping of these so not going out of my way to buy more. However, after problems trying to cash my US dividend cheques in NZ I have joined the YUMC Dividend Reinvestment Plan. So the answer to your question is 'yes' as a result of that. I am not buying in a significant way though.

SNOOPY

Have had similar problems with all foreign cheques recently. Now only invest in overseas stocks that have a dividend reinvestment plan, as otherwise the hassle is just too much.

[percy]

With my Australian shares I go for drp where avaliable.Cheques go into my Craigs Australian cash management a/c.I do have a lot of problems with the companies that no longer issue cheques.Usually takes 3 or 4 emails and often a phone call before they get the right numbers for my NZ bank a/c.Takes about a month.Those companies I am selling out of, because I can't be bothered with the hassles.
With my recent UK investment I have the shares in Craigs' Custodial a/c to save problems.

[PLYNCH]

From the Forager funds International shares fund January report.

"Unsurprisingly the quarantine measures are hurting our investment in Yum China (NYSE:YUMC), the owner of KFC and Pizza Hut stores in China. More than 30% of their restaurants have been temporarily closed. For those open, sales per store have halved versus the prior comparable period. It’s a painful and substantial test of the business and management, at the very least temporarily. Having first opened in China in 1987, Yum China has built scale and processes that have been able to absorb shocks. The SARS outbreak in 2003 is a case in point. Revenues have grown ten-fold since. There have been food safety incidents that forced a rejigging of supply chain processes. More recently, the company has navigated through the rapid spike in food cost caused by the African Swine Flu. But this is clearly the biggest test yet. Prior to the emergence of the virus, the recent fourth quarter result was strong, beating market expectations for the ninth consecutive quarter. The company has executed well on factors within its control—growing its store network, improving its digital strategy and launching several new menu offerings. In a year where food costs were rising, the company still managed to expand margins. The balance sheet is strong, with more than US$1.6bn in cash and no debt. Few competitors have such meaningful ‘rainy day’ reserves. This should see Yum China through the current challenges. "

[Arthur]

Any idea why this hasn't dropped much?

[Snoopy]

Any idea why this hasn't dropped much?

This is a surprise to me as well Arthur. I don't know the answer, but I can offer the following observations:

1/ YUMC is very will capitalised (no term debt), so is well placed to ride out any short term downturn. The strength of the underlying business model has not changed.
2/ YUMC is fundamentally a domestic company with most food ingredients grown and supplied from within China. So there is unlikely to be any shortage of product for sale from international trade restrictions.
3/ People still have to eat and one of YUMC's very strong points of difference is food hygiene standards. By that I mean they have a standard (not that it is necessarily world class by western standards) whereas most local food restaurant businesses have no quality control standard at all. This means local people may be more inclined to eat at a YUMC restaurant than 'Chin's Diner'.

SNOOPY

[Snoopy]

From the Forager funds International shares fund January report.

"Unsurprisingly the quarantine measures are hurting our investment in Yum China (NYSE:YUMC), the owner of KFC and Pizza Hut stores in China. More than 30% of their restaurants have been temporarily closed. For those open, sales per store have halved versus the prior comparable period. It’s a painful and substantial test of the business and management, at the very least temporarily."

It was good to hear YUMC CEO Joey Wat, on the RNZ airwaves this morning. She said that every YUMC customer was given a ticket with the name and temperature of the person who served them on it. When the order was delivered, a similar ticket was added for the delivery person. This provides confidence and traceability for their customers.

More information on what YUMC are doing with their COVID-19 risk control program can be found here.

http://ir.yumchina.com/news-releases...ht-coronavirus

"Since January 30th, the KFC and Pizza Hut brands in China have rolled out contactless delivery services nationwide and contactless in store pick-up services at selected locations in China. These services help reduce the risk of person-to-person transmission of the coronavirus and have been well received by customers."

An unlikely growth opportunity has opened up in the area of corporate meals

"helping employers to offer healthy and reliable dining options to their staff."

YUMC have been helping health workers too.

"Since January 27, the KFC and Pizza Hut brands have been providing up to 1,500 free meals every day to medical workers in hospitals across Wuhan. The initiative has since been expanded, resulting in the delivery of over 70,000 free meals to nearly 500 hospitals and community health centres across mainland China."

Then there is a picture of a full body suited medical worker carrying in three buckets of healthy KFC into the hospital - classic!

SNOOPY

[Valuegrowth]

Investors are diving into consumer staples now.

[Valuegrowth]

https://finance.yahoo.com/news/yum-c...015400397.html