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Yum China Holdings has launched a secondary listing in Hong Kong through which it seeks to raise over HK$19.6 billion ($2.5 billion). Shares of Yum China are advancing almost 4% in early market trading on Monday.
Yum China (YUMC), China’s largest restaurant operator, plans to sell 41.91 million shares in the Hong Kong public offering with shares priced at a maximum of HK$468 per share. The price will be determined on or before Sept. 4.
The company said it plans to use the proceeds from the offering to expand its restaurant network and invest in digitalization, supply chain and food innovation, as well as in “high-quality assets” that can bring growth opportunities. The rest of the proceeds would go towards working capital and general corporate purposes. (See YUMC stock analysis on TipRanks).
Earlier on Aug. 6, CLSA analyst Terrance Liu initiated coverage of Yum China with a Buy rating and a price target of $63 (11.5% upside potential). Liu believes that the company "stands out in the catering field armed with deep moats that can sustain solid growth". The analyst sees strong margin upside at Pizza Hut and solid growth prospects in its coffee products over the medium term.
Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 6 Buys and 1 Hold. The average price target of $61.6 implies upside potential of 9% to current levels, with shares already up about 23% year-to-date.