SHANGHAI - Yum China Holdings (NYSE:YUMC), Inc. (NYSE: YUMC and HKEX: 9987), a leading restaurant company in China with a market capitalization of $2.42 billion, announced plans to repurchase approximately $360 million of its shares in the first half of 2025. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value estimates. The buyback is part of a broader capital allocation strategy aimed at returning $4.5 billion to shareholders from 2024 through 2026, which includes dividends and share repurchases.
The repurchase agreements are divided between the U.S. and Hong Kong markets, with around $290 million allocated under the Rule 10b5-1 of the United States Securities Exchange Act of 1934 in the U.S., and approximately HK$550 million earmarked for a similar program in Hong Kong.
These repurchases follow a period of significant returns to shareholders. In the first 11 months of 2024, Yum China has already returned a record $1.37 billion to its shareholders, which includes $1.18 billion in share repurchases and $187 million in cash dividends. The company maintains a healthy 2.14% dividend yield and trades at an attractive P/E ratio of 11.16, with annual revenue reaching $16.62 billion. This activity has resulted in the buyback of 30 million shares, representing about 7% of its outstanding shares as of December 31, 2023.
Yum China's CEO, Joey Wat, emphasized the company's commitment to balancing business growth with shareholder returns, citing confidence in the company's cash generation capabilities. Wat stated that the company aims to create sustainable value for its shareholders through a balanced mix of share repurchases and dividends.
Since 2017, Yum China has returned over $4.3 billion to its shareholders through dividends and share repurchases. InvestingPro highlights this trend with two key tips: management has been aggressively buying back shares and the company maintains a high shareholder yield. Subscribers can access 10 additional exclusive insights about YUMC on the platform. The company operates over 15,000 restaurants in China and is recognized as the country's largest restaurant company with a workforce of approximately 400,000 employees. Its portfolio includes well-known brands such as KFC, Pizza Hut, and Taco Bell.
The information provided is based on a press release statement and outlines the company's forward-looking plans for capital returns to shareholders. However, it is important to note that these plans are subject to market conditions and capital needs, and there can be no assurance that the estimates and assumptions will prove to be correct.
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