Yum! move boosts Little Sheep
By Jin Jing |
October 23, 2009, Friday
|
Print Edition
Print Edition
SHARES of China's hot-pot chain Little Sheep Group Ltd rose 1.6 percent after United States fast food giant Yum! Brands Inc agreed to buy an additional 7.3 percent stake in the company for HK$300 million (US$38.7 million).
Hohhot-based Little Sheep said Yum! would buy 75 million shares at HK$4 each from its top executives, boosting the US firm's total interest in Little Sheep to 27.3 percent, according to a statement filed to the Hong Kong Stock Exchange late Wednesday.
Yum! said in a separate statement the increased stake demonstrated its confidence in Little Sheep's future prospects. It added it will offer consulting service and expertise to Little Sheep while not being involved in its management.
"Yum! still holds a positive outlook for China's food industry," said Liu Jinhu, an analyst at Sealand Securities Co Ltd. "As a leader in Chinese-style catering, Little Sheep brings complementary benefits to Yum!."
China is becoming more important for Yum!, whose third-quarter profit grew 18 percent to US$334 million worldwide.
Shares of Little Sheep closed at HK$4.40 yesterday. Its shares have more than doubled this year.
Kentucky-based Yum!, which owns 3,000 KFC and Pizza Hut restaurants in China, spent US$63 million to buy 20 percent in Little Sheep in March. Little Sheep, famous for its mutton hot pot, posted an 18.5 percent rise in revenue to 626.3 million yuan (US$92 million) in the first half of this year. It has more than 400 restaurants in China.
But its profit slid 7.2 percent to 39.2 million yuan on various promotions and lower menu prices.
Hohhot-based Little Sheep said Yum! would buy 75 million shares at HK$4 each from its top executives, boosting the US firm's total interest in Little Sheep to 27.3 percent, according to a statement filed to the Hong Kong Stock Exchange late Wednesday.
Yum! said in a separate statement the increased stake demonstrated its confidence in Little Sheep's future prospects. It added it will offer consulting service and expertise to Little Sheep while not being involved in its management.
"Yum! still holds a positive outlook for China's food industry," said Liu Jinhu, an analyst at Sealand Securities Co Ltd. "As a leader in Chinese-style catering, Little Sheep brings complementary benefits to Yum!."
China is becoming more important for Yum!, whose third-quarter profit grew 18 percent to US$334 million worldwide.
Shares of Little Sheep closed at HK$4.40 yesterday. Its shares have more than doubled this year.
Kentucky-based Yum!, which owns 3,000 KFC and Pizza Hut restaurants in China, spent US$63 million to buy 20 percent in Little Sheep in March. Little Sheep, famous for its mutton hot pot, posted an 18.5 percent rise in revenue to 626.3 million yuan (US$92 million) in the first half of this year. It has more than 400 restaurants in China.
But its profit slid 7.2 percent to 39.2 million yuan on various promotions and lower menu prices.
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