(Yicai) Aug. 6 -- Shares in Yum China surged as much as 12.4 percent today after the operator of Kentucky Fried Chicken and Pizza Hut restaurants in China reported its highest net profit for a second quarter since it went public in 2016 thanks to the firm’s focus on value-for-money meals and improved efficiency.

Yum China’s share price [HKG:9987] closed up 10.5 percent at HKD252.80 (USD32.44). Earlier in the day it hit HKD257.

Yum China’s net profit jumped 8 percent in the three months ended June 30 from a year earlier to USD212 million, the Shanghai-based company said. When excluding foreign currency conversions, it soared 11 percent over the period.

Revenue, meanwhile, climbed 1 percent to USD2.6 trillion and operating profit advanced 4 percent to USD266 million, the report said. When excluding foreign currency conversions, they gained 4 percent and 7 percent, respectively.

Yum China’s focus on providing value-for-money and original meals has driven up sales turnover, Chief Executive Officer Qu Cuirong said. Also, by improving operational efficiency and stabilizing restaurant margins, profit margins have widened.

Transaction volumes advanced 4 percent over the period, while store sales were at 96 percent of that in the same period last year, according to the report. Better efficiency enabled restaurants’ profit margins to stay at 15.5 percent, the same as a year ago. The operating margin was 9.9 percent, a gain of 20 basis points from a year ago.

KFC has increased its market share on take-out platforms by lowering prices and cutting delivery fees, while Pizza Hut uses cheap pizzas to attract customers who are looking for value for money, Qu said.

Around 38 percent of the two fast-food chains' revenue comes from take aways and in the second quarter, Yum China’s take-out sales jumped 11 percent from a year earlier.

In addition, the pay back period for new stores is good. KFC’s return cycle remained at two years, while Pizza Hut’s was shortened to two to three years, said Qu.

In the first half, Yum China’s net profit advanced 3 percent year on year to USD499 million, or a gain of 7 percent when excluding the impact of foreign currency conversion. While revenue edged up 1 percent to USD5.6 billion.

Yum China added 401 new stores in the three months ended June 30, bringing the total to 15,423. Of these, 10,931 were for KFC and 3,504 for Pizza Hut.

Editor: Kim Taylor