Chris Blumas Yum China Holdings Inc YUMC-N TOP PICK Feb 16, 2022

Exceptionally well run. Amazing digital capabilities. China is an unpenetrated market. Negatively affected by sentiment, and that's when you want to take advantage. Still holds, and would be willing to buy today.

Can play offense aggressively. About $3B in net cash on balance sheet. Used excess capital to accelerate store buildout and growth profile. Results from this won't be seen for 5-10 years. Wonderful management and best-in-class digital capabilities. Pursued vertical integration to secure product availability. Yield is 0.90%.

Spun off by Yum! Brands, so pure-play China but with western governance. Lower-risk way to play exceptional growth in China. Pristine balance sheet with more than $3B cash. Strong management. Accelerating store buildout. Amazing digital capabilities. Amazing valuation. Yield is 1%.

Valuation is in the dumps. First-class operator. Rock-solid balance sheet, no debt at all. Net cash north of $2.5B. Great management team and digital capabilities. With cash so available, increased store count during distressed times. Unique, best of breed, depressed valuation of 16x adjusted earnings. 

Over 400M loyalty members on digital app, more than entire US population, which highlights just how well they can grow. Better growth outlook than almost everyone in its space. Yield is 1.6%.

Uncertainty with QSR is that previous changes were difficult because it's a multi-brand platform. Valuation is very reasonable. Very good growth profile and management. Balance sheet is not investment grade, and some don't care. He cares, as it's difficult to grow if you're not investment grade. Investment grade gives you much larger pool of people who can supply capital.

Likes QSR, but owns YUMC instead. YUMC wins from a valuation and growth perspective, but also has more geopolitical risk.

Wins big on valuation. Massive amount of cash on balance sheet, no debt. Trades around 14x earnings. Valuation due to negative sentiment on Chinese economy. Very robust FCF yield. Massive opportunity for growth over the next 10 years at a very discounted valuation. Yield is 1.7%.

Hurt by Covid, but has come out flying. Took advantage of low interest rates to accelerate store rollouts. A lower-risk way to play a Chinese recovery.

Would continue to buy today. First-class operator. Best-in-class growth, lowest-in-class valuation. Sold off hard along with the rest of China. As part of a diversified portfolio, you want some EM exposure. Trades at 12x earnings, much less than NA peers.

Very good balance sheet, no debt. Very reasonable price point. Regardless of the strength of the overall Chinese economy, people still need to eat. Whips around along with sentiment on China, and it will take some time to decouple from that. Still likes it for the long term.

An EM stock, so it gets swamped with news of China. Still, a safe way to invest in China. Has grown footprint by capitalizing on weakness in economy. Massively undervalued; he'd consider buying today.

As an emerging market stock, and with threats of delisting Chinese stocks, it's volatile. Use those pullbacks to enter. Governance is best in breed. Massive growth profile.