Analyst Note
| Ivan Su |Wide-moat Yum China's first-quarter earnings were largely in line with our expectations, but they came significantly above Refinitiv consensus estimates. Management remains rightfully upbeat on the rest of this year as reopening boosts restaurant traffic. Overall, we maintain our USD 84 fair value estimate and continue to view shares as undervalued. We believe Yum’s current share price overlooks two things: 1) Yum China's opportunities for unit expansion in China's growing fast-food industry; and 2) further margin expansion that will be realized by operating leverage and ongoing digital investments.