Yum! (YUM) Trades Lower as China Pressures 'Little Sheep' Investor
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Price: $69.21 -0.13%
Overall Analyst Rating:
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Dividend Yield: 1.9%
EPS Growth %: -7.9%
Overall Analyst Rating:
NEUTRAL (
Down)Dividend Yield: 1.9%
EPS Growth %: -7.9%
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Yum! Brands (NYSE: YUM) is trading lower following news that one potential private-equity partner in China is getting some cold feet.
According to Bloomberg, 3i Group plc, which made an investment in Little Sheep, is said to be closing its Shanghai offices and not making any more investments in the region.
Yum! acquired Little Sheep earlier this year and said it sees modest profit benefit for the segment in it latest call. The company will begin reporting results for the unit with its next EPS reports. The acquisition provided 3i with 300 percent profit on its initial $25 million investment in 2006.
The news indicates slowing potential in China and a challenging private-equity environment, which has caused the firm to restructure itself. In February, 3i said it was looking to bolster its presence in China. However, that tune has since changed as pressure has mounted the firm to cut costs.
With China pegged as a key growth environment for Yum! and its peers, the news is what investors should be watching over the next few quarters as Europe financial issues continue to get resolved and China makes further moves to bolster growth amid those European pressures.
Shares of Yum! are off 1.5 percent Friday. It's projected second-quarter earnings date is mid-July.
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According to Bloomberg, 3i Group plc, which made an investment in Little Sheep, is said to be closing its Shanghai offices and not making any more investments in the region.
Yum! acquired Little Sheep earlier this year and said it sees modest profit benefit for the segment in it latest call. The company will begin reporting results for the unit with its next EPS reports. The acquisition provided 3i with 300 percent profit on its initial $25 million investment in 2006.
The news indicates slowing potential in China and a challenging private-equity environment, which has caused the firm to restructure itself. In February, 3i said it was looking to bolster its presence in China. However, that tune has since changed as pressure has mounted the firm to cut costs.
With China pegged as a key growth environment for Yum! and its peers, the news is what investors should be watching over the next few quarters as Europe financial issues continue to get resolved and China makes further moves to bolster growth amid those European pressures.
Shares of Yum! are off 1.5 percent Friday. It's projected second-quarter earnings date is mid-July.
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