YUMC Yum China Holdings Inc

By Clarence Leong

Shares of Yum China Holdings Inc. rose sharply in early trading, after the restaurant-chain operator's third-quarter profit almost doubled from a year earlier.

Yum China's Hong Kong-listed stock jumped 13% to 387.00 Hong Kong dollars (US$49.30), taking it into positive territory for the year with a 1.2% gain. If Wednesday's gains hold, the stock would post its biggest one-day jump since mid-March.

Shanghai-based Yum China, which operates KFC and Pizza Hut restaurants in China, on Wednesday morning posted a 98% rise in net profit for the July-September period to US$206 million. This was boosted by a 77% increase in operating profit.

But Yum China said a Covid-19 resurgence across China is darkening the outlook for the fourth quarter.

"Intermittent outbreaks along with downward pressure on the economy and cautious consumer spending are likely to negatively impact sales momentum," Chief Financial Officer Andy Yeung said in a statement. The company also faces inflationary cost pressures, he said.

Yum China could count on its strengths including product innovations, a better store portfolio and a flexible supply chain, which have "fueled its quicker recovery than peers," Citi analysts Xiaopo Wei and Vincent Yang said in a note.

Citi keeps a buy rating and HK$446.20 target price on Yum China.

Write to Clarence Leong at clarence.leong@wsj.com

(END) Dow Jones Newswires

November 01, 2022 23:24 ET (03:24 GMT)

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