Yum Well-Placed To Weather Demand Headwinds In China

Over the coming quarters, we maintain our view that a Chinese investment-led economic slowdown is unlikely to have a dramatic impact on Yum! Brands' customer traffic, given its continued product and branding innovation. Rather, we are more concerned about Yum's margin prospects in China due to its growing wage bill. Given its overstretched valuations, we see potential for a short-term retracement in the company's share price, although it should remain ensconced within an upward trading channel over the longer term.

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