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UPDATE 1-Yum China's Pizza Hut sales disappoint, shares slide

(Adds details, shares)

July 5 (Reuters) - Yum China Holdings Inc, the operator of KFC and Pizza Hut in the world's second-largest economy, posted quarterly sales slightly below estimates as fewer customers ordered from Pizza Hut.

Shares of China's largest publicly held restaurant operator were down 4.1 percent at $38.45 in after-hours trading on Wednesday.

The company's Pizza Hut division, which has been a dampener so far, posted flat same-restaurant sales in the second quarter ended May 31, missing analysts' estimate of a 1.5 percent rise, according to research firm Consensus Metrix.

Yum China has been trying to turn around the unit by simplifying its menu and most recently buying a controlling stake in food-delivery service Daojia.

The company's same-restaurant sales rose 3 percent in the quarter, beating analysts' average estimate of a rise of 2.4 percent.

Net income rose to $107 million, or 27 cents per share, in the quarter, from $77 million, or 21 cents per share, a year earlier.

Total revenue fell 0.4 percent to $1.59 billion, slightly missing the average analyst estimate of $1.60 billion, according to Thomson Reuters I/B/E/S.

However, Yum China has improved quarterly restaurant margins, by implementing loyalty programs and digitalization of its ordering and delivery services, with mobile payments exceeding 40 percent of sales. (Reporting by Karina Dsouza in Bengaluru; Edited by Martina D'Couto)