YUMC
Yum China Holdings, Inc.
$45.10
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Overvalued
Trading 6.1% above fair value
You pay
$45.10
Bear
$35.00
Fair
$42.50
Bull
$50.00
Bear
$35.00
-22.4%
$2.50 × 14x P/E
Fair
$42.50
-5.8%
$2.50 × 17x P/E
Bull
$50.00
+10.9%
$2.50 × 20x P/E
Adjust Assumptions
17.0x
2.5$
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
18.0x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (19 analysts)
$59.00
Divergence from AlphaVal
28%
Summary
Applying a 17x P/E to adjusted EPS of $2.50, the base-case value is $42.50 per share.
Warnings
Wall Street's average price target is $59.00 (from 19 analysts). Our estimate is 28% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples