Investment Rating - The report maintains a "Buy" rating for Yum China (YUMC.US/9987.HK) with a target price of HKD 479.7 for the Hong Kong-listed shares and USD 61.5 for the US-listed shares [2][3] Core Views - Yum China's 3Q24 operating profit growth exceeded expectations due to cost reduction and efficiency improvements [2] - The company's flexible operational strategies and strong management capabilities are driving improved same-store sales and continued cost optimization [2] - Yum China plans to increase shareholder returns from USD 3 billion to USD 4.5 billion for 2024-2026, which is expected to boost market sentiment [2] Same-Store Sales Outlook - Same-store sales are expected to trend positively in 2025, with KFC likely to return to positive same-store sales growth and Pizza Hut narrowing its decline [2] - KFC's average check is expected to remain stable, while Pizza Hut's average check may face downward pressure due to the increasing proportion of WOW stores [2] Cost Optimization and Efficiency - Despite declining average checks, restaurant-level margins remained flat YoY in 3Q24, and operating margins expanded by 1.0ppt [2] - The company expects cost optimization efforts to continue, though the marginal benefits may weaken in 2025 [2] - Management aims to maintain the administrative expense ratio below 5% in the medium to long term [2] Franchise Expansion - Yum China plans to accelerate franchise development, with franchise stores expected to account for 40%-50% of KFC's net new openings and 20%-30% of Pizza Hut's net new openings [2] - The franchise model is seen as complementary to company-owned stores, helping to expand into new markets and regions [2] - Franchise stores are expected to achieve operating margins comparable to company-owned stores, with strict controls in place to ensure operational quality and food safety [2] Financial Performance and Forecasts - Revenue is projected to grow from USD 11,352 million in 2024E to USD 13,041 million in 2026E, with net income attributable to shareholders increasing from USD 919 million to USD 1,059 million over the same period [6] - The company's EV/EBITDA multiple is expected to decline from 9.9x in 2024E to 8.4x in 2026E, reflecting improved profitability and efficiency [6] Market Sentiment and Valuation - The report highlights a potential upside of 27.3% for Yum China's US-listed shares and 24.3% for its Hong Kong-listed shares based on the target prices [3][4] - The company's market capitalization stands at USD 8,386 million, with a 3-month average daily trading volume of USD 144.9 million [3]

Investment Rating - The report maintains a "Buy" rating for Yum China, indicating a positive outlook for the company's stock performance [5]. Core Views - Yum China demonstrated strong operational efficiency and cost control, with a Q3 restaurant profit margin of 17%, stable year-on-year [2]. - The company plans to increase its shareholder return by 50% from $3 billion to $4.5 billion for the years 2024-2026, with a target of returning $1.5 billion to shareholders in 2024 [4]. - The company is focusing on expanding its franchise model, aiming to increase the proportion of franchise stores from 15-20% to 40-50% in the coming years [3]. Financial Performance - In Q3 2024, Yum China reported revenues of $3.07 billion, a year-on-year increase of 5%, with a system sales growth of 4% [1]. - The operating profit for Q3 was $371 million, reflecting a year-on-year increase of 15%, with an operating profit margin of 12.1% [1]. - The GAAP net profit attributable to shareholders was $297 million, up 22% year-on-year, while the Non-GAAP net profit also stood at $297 million, marking a 20% increase [1]. Store Expansion and Market Strategy - The company opened 438 new stores in Q3, with 145 being franchise stores, representing 33% of the new openings [3]. - As of Q3 2024, Yum China had a total of 15,861 stores, with KFC and Pizza Hut accounting for 11,283 and 3,606 stores, respectively [3]. - The company is leveraging favorable raw material prices and operational efficiency projects to maintain stable profit margins despite pressures on same-store sales [2]. Earnings Forecast - The forecast for net profit attributable to shareholders for FY2024-2026 is $902 million, $978 million, and $1.05 billion, respectively, with corresponding EPS of $2.37, $2.57, and $2.76 [4][9]. - The report projects a P/E ratio of 21, 19, and 18 for FY2024, FY2025, and FY2026, respectively, based on the closing price on November 5 [4][9].

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股 票 研 究 海 外 公 司 （ 中 国 香 港 ） 证 券 研 究 报 告 国泰君安版权所有发送给上海东方财富金融数据服务有限公司.东财接收研报邮箱.ybjieshou@eastmoney.com p1 股票研究 /[Table_Date] 2024.11.05 运营效率持续优化，提高股东回报 百胜中国(9987) [Table_Industry] 社会服务业 [Table_Invest] 评级： 增持 ——百胜中国 2024Q3 业绩点评 | --- | --- | --- | |----------|-------------------------------------|-----------------------------| | | | | | | [table_Authors] 刘越男 ( 分析师 ) | 宋小寒 ( 分析师 ) | | | 021-38677706 | 010-83939087 | | | liuyuenan@gtjas.com | songxiaohan026736@gtjas.com | | 登记编号 | S0880516030003 | S0880524080011 ...

来源：公司年报、国金证券研究所 事件 2024 年 11 月 4 日，公司公告三季报，Q3 总收入 30.7 亿美元/+5% （剔除汇率影响+4%），核心经营利润 3.69 亿美元/剔除汇率影响 +18%，经调整归母净利 2.97 亿美元/+20%（剔除汇率影响+19%）。 点评 提效+创新收效良好，计划进一步提升加盟比例。Q3 整体餐厅利润 率 17.0%/持平，剔除 1500 万美元影响餐厅层面可比项目后 +0.5pct，管理费用率 4.5%/-1.3pct。新店型，肯悦咖啡"肩并肩" 模式对门店销售及利润产生正贡献，截至 11 月初突破 500 家；必 胜客 WOW 从广东省向外扩张，已覆盖 10 个省份、门店数增至 150 家，期待其对必胜客同店及扩大覆盖客群的正面影响。Q3 公司净 开店 438 家，其中加盟净增 145 家、占比 33%，计划未来几年肯德 基净开店中加盟比例逐步提升至 40-50%、必胜客提升至 20%-30%。 肯德基：同店降幅环比收窄 1pct，客单企稳。Q3 肯德基不变汇率 系统销额+6%（前值+5%），同店销售额-2%（前值-3%），其中单量 +1%（前值+4%）、客单 3 ...

Summary of Yum! China 3rd Quarter 2024 Earnings Conference Call Company Overview - **Company**: Yum! China - **Quarter**: 3rd Quarter 2024 Key Industry Insights - **Industry**: Fast Food and Restaurant Sector in China - **Market Dynamics**: The restaurant industry continues to grow, with global players investing aggressively in the Chinese market. There is a trend of rationalizing promotional intensity among competitors, and some aggressive players are slowing down store openings [16][19]. Core Financial Performance - **System Sales Growth**: Grew by 4% year-over-year [2][8]. - **Same-Store Sales Index**: Improved to 97% of the prior year's level [1][8]. - **Delivery Sales**: Achieved double-digit growth for 10 consecutive years, with delivery sales reaching around 40% of the sales mix in Q3 [2][4]. - **Operating Profit**: Grew by 18% year-over-year, with diluted EPS increasing by 32% [2][8]. - **Revenue**: $8.7 billion in the first nine months, with over $1 billion in operating profit [2][5]. - **Net Income**: $297 million, growing 21% year-over-year [10]. Strategic Initiatives - **RGM 2.0 Strategy**: Focus on operational efficiency and innovation, leading to improved margins and customer satisfaction [2][3]. - **Project FreshEye and Project RedEye**: Aimed at enhancing operational efficiency through process evaluation and innovative technology [3][4]. - **Store Expansion**: Opened 438 net new stores in Q3, totaling over 1,200 new stores year-to-date, on track to meet the target of 1,500 to 1,700 new stores for the year [6][12]. Brand Performance KFC - **System Sales Growth**: Increased by 6% year-over-year [8]. - **Same-Store Sales**: Reached 98% of prior year levels with a 1% same-store transaction growth [8]. - **New Product Innovations**: Successful introduction of new items like the original recipe chicken burger and curry gravy chicken [4][5]. - **Franchise Development**: Currently, franchisees represent 12% of KFC's store portfolio, with plans to increase this to 40-50% over the next few years [7][17]. Pizza Hut - **System Sales Growth**: Increased by 2% year-over-year [8]. - **Same-Store Sales**: At 94% of prior year levels, with a 4% same-store transaction growth [8]. - **New Store Formats**: Introduction of the Pizza Hut WOW model, which has shown promising initial results [6][20]. - **Durian Pizza Success**: Durian pizza has become the number one best-selling pizza, with nearly 30 million sold year-to-date [5][6]. Capital Return Strategy - **Shareholder Returns**: Over $1.2 billion returned to shareholders in the first nine months, including $1 billion in share repurchases [10][11]. - **Future Plans**: Aiming to increase capital returns to $4.5 billion from 2024 to 2026, up from the previous target of $3 billion [11][12]. Operational Efficiency and Cost Management - **Cost of Sales**: Remained stable at 31.7%, with favorable commodity prices contributing to cost management [9][10]. - **Labor Costs**: Decreased to 25.1%, with improved operational efficiency offsetting wage increases [9][10]. - **Marketing and Advertising Expenses**: Decreased by 19% year-over-year, reflecting operational efficiency gains [10]. Consumer Trends and Market Outlook - **Consumer Behavior**: Consumers are becoming more rational and value-conscious, seeking good quality and emotional value [3][4]. - **Market Conditions**: Despite recent stimulus policies, no significant changes in market conditions or consumer sentiment have been observed entering Q4 [11][19]. - **Q4 Expectations**: Traditionally a low season, with expectations of smaller sales and profits, but confidence remains in capturing consumer needs through strategic initiatives [11][19]. Conclusion - **Key Messages**: 1. Resiliency and growth strategy highlighted by strong Q3 results. 2. Continued optimism for long-term growth opportunities in China. 3. Commitment to sustainable growth and increased capital returns to shareholders [12].

Thank you for standing by and welcome to the Yum! China 3rd Quarter 2024 Earnings Conference Call. All participants are in listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Florence Lip, Senior IR Director. Please go ahead. Thank you, Operator. Hello, everyone. Thank you for joining YoungChina's third q ...

Revenue and Sales Performance - Total revenue grew by 5% to $3.07 billion, marking the highest quarterly revenue in history[4]. - Digital order revenue reached $2.61 billion, accounting for approximately 90% of restaurant revenue[4]. - Same-store sales index improved to 97% of last year's level, with a 1% year-over-year increase in same-store transaction volume[4]. - KFC's total revenue for Q3 2024 reached $2.311 billion, a 6% increase compared to Q3 2023[8]. - Pizza Hut's total revenue for Q3 2024 was $615 million, a 2% increase compared to Q3 2023[10]. - Total revenue for the nine months ended September 30, 2024, reached $8,708 million, reflecting a 17% increase compared to $8,485 million for the same period last year[22]. - Total revenue for the company reached $2,914 million, with KFC contributing $2,186 million and Pizza Hut $599 million[47]. - Total revenue for the company reached $8,485 million, with KFC contributing $6,368 million and Pizza Hut contributing $1,750 million[51]. Profitability and Operating Performance - Operating profit rose by 15% to $371 million, with a core operating profit increase of 18%[4]. - KFC's operating profit for Q3 2024 was $364 million, up 6% year-over-year, with an operating profit margin of 15.7%[9]. - Pizza Hut's operating profit for Q3 2024 was $52 million, reflecting a 13% year-over-year increase[11]. - The operating margin improved to 12.1% for the quarter, up from 11.1% in the same quarter last year, indicating enhanced operational efficiency[22]. - The company reported a basic earnings per share of $0.77 for the quarter, compared to $0.59 in the same quarter last year, marking a significant increase[22]. - The company reported a net profit of $854 million for the nine months ending September 30, 2024, compared to $794 million for the same period in 2023, reflecting a growth of approximately 7.6%[28]. - The company reported a net loss of $371 million after adjustments for special items[46]. - The company reported a net loss of $20 million in other segments, impacting overall profitability[52]. Store Expansion and System Sales - The total number of stores reached 15,861, including 11,283 KFC and 3,606 Pizza Hut locations, with a net addition of 438 stores in the third quarter[4]. - KFC added 352 new restaurants in Q3 2024, with 134 of them being franchise locations, accounting for 38% of the new openings[9]. - The company aims to add approximately 1,500 to 1,700 new stores and plans capital expenditures between $700 million and $850 million for fiscal year 2024[15]. - The number of brand restaurants increased to 11,283 as of September 30, 2024, from 10,296 at the end of 2023, representing a net increase of 987 locations[31]. - The company opened 110 new stores in the nine months ending September 30, 2024, compared to 97 new stores in the same period of 2023, showing a growth of 13.4%[32]. Shareholder Returns and Financial Management - Shareholder returns increased by 50% to $4.5 billion for the period from 2024 to 2026[3]. - The company repurchased $187 million in stock and paid $61 million in cash dividends, returning approximately $248 million to shareholders in the third quarter[4]. - The company plans to return a record $1.5 billion to shareholders through quarterly cash dividends and stock buybacks[15]. - In the first nine months of the year, the company returned a record $1.24 billion to shareholders, including $1.06 billion in stock buybacks and $187 million in cash dividends[7]. - The company plans to increase shareholder returns from $3 billion to $4.5 billion between 2024 and 2026, a 50% increase[7]. Cost Management and Expenses - Total costs and expenses for the quarter were $2,700 million, a 4% increase from $2,591 million in the same quarter last year[22]. - KFC's total costs and expenses for the quarter were $1,947 million, a 6% increase from $1,844 million in the same quarter of 2023[23]. - Pizza Hut's total costs and expenses for the quarter were $563 million, a 1% increase from $552 million in the same quarter of 2023[24]. - Management expenses were reported at $485 million, with KFC at $203 million and Pizza Hut at $89 million[51]. Strategic Initiatives and Future Outlook - The company continues to implement the "RGM 2.0 strategy" focusing on efficiency and innovation to drive growth[5]. - The company plans to continue expanding its market presence and investing in new product development to drive future growth[22]. - Future guidance indicates a focus on improving operational efficiency and enhancing customer experience[45]. - The company emphasizes the importance of adjusted non-GAAP measures to provide additional insights into operational performance, excluding special items and foreign currency effects[33].

公司研究·海外公司快评 社会服务·酒店餐饮 投资评级：优于大市（维持） 证券分析师： 曾光 0755-82150809 zengguang@guosen.com.cn 执证编码：S0980511040003 证券分析师： 钟潇 0755-82132098 zhongxiao@guosen.com.cn 执证编码：S0980513100003 证券分析师： 张鲁 010-88005377 zhanglu5@guosen.com.cn 执证编码：S0980521120002 优于大市 百胜中国（09987.HK） 促消费政策频出经营望受益，持续回购彰显管理层信心 事项：9 月 24 日，百胜中国宣布，位于上海嘉定区的百胜中国供应链管理中心正式竣工并 投入运营，该中心为百胜中国最大的自建供应链中心。 国信社服观点 1）财报回顾：2024Q2 经调整净利润增速环比转正同增 7%，同店&开店韧性表现、降本增效综合助力。 2024H1，公司收入 56.4 亿美元/+1%；经调整净利润 4.99 亿美元/+2%。2024Q2，公司收入 26.8 亿美元/+1%； 经调整净利润为 2.12 亿美元/+7%，降本增效助力利润增 ...

Company Overview - As of June 30, 2024, Yum China operates 15,423 restaurants across over 2,100 cities in China, making it the largest restaurant company in the country by system sales[5]. - KFC is the leading fast-food brand in China, with 10,931 restaurants as of June 30, 2024, while Pizza Hut is the largest casual dining brand with 3,504 restaurants[5]. - The company has exclusive operating rights for KFC, Pizza Hut, and Taco Bell (pending certain milestones) in mainland China, and fully owns the intellectual property for Little Sheep and Huang Ji Huang brands[5]. - The company is exploring expansion opportunities in existing and new cities within China, indicating a strong outlook for future growth[5]. - The company has established a joint venture with Lavazza Group to explore and develop the Lavazza coffee brand concept in China[5]. Financial Performance - System sales growth for the six months ended June 30, 2024, was 5%, down from 24% in the same period of 2023[9]. - Same-store sales decreased by 3% for the six months ended June 30, 2024, compared to an increase of 11% in the same period of 2023[9]. - Operating profit for the six months ended June 30, 2024, was $640 million, a decrease of 5% from $673 million in the same period of 2023[9]. - Net profit increased by 3% to $499 million for the six months ended June 30, 2024, compared to $486 million in the same period of 2023[11]. - Total revenue for the six months ended June 30, 2024, was $5.637 billion, reflecting a 1% increase from $5.571 billion in the same period of 2023[11]. - Core operating profit for the six months ended June 30, 2024, was $671 million, an increase of 5% from $639 million in the same period of 2023[11]. - Adjusted EBITDA for the six months ended June 30, 2024, was $894 million, down from $927 million in 2023[17]. - The company reported a restaurant profit of $884 million, which is a significant increase from the previous year's profit of $967 million[19]. Shareholder Returns - The company aims to return a record $1.5 billion to shareholders through quarterly cash dividends and share repurchases[13]. - The quarterly cash dividend declared on August 5, 2024, is $0.16 per share, totaling approximately $61 million[50]. - The company repurchased approximately 21.7 million shares for $868 million and 2.1 million shares for $124 million in the six months ending June 30, 2024, and 2023 respectively[50]. Capital Expenditures and Investments - Capital expenditures are projected to be between $700 million and $850 million for fiscal year 2024[13]. - The company plans to open approximately 1,500 to 1,700 new stores in fiscal year 2024[13]. - The company generated a net cash inflow of $2.2 billion from a global issuance in September 2020, which supports future operations and capital expenditures[48]. Tax and Regulatory Matters - The company is undergoing a tax audit by Chinese tax authorities regarding transfer pricing, which may have significant implications for its financial condition and operating performance[42]. - The actual tax rate for the six months ended June 30, 2024, was 26.2%, down from 27.0% in 2023[16]. - The company anticipates potential significant developments in the next 12 months regarding the ongoing tax review and discussions with tax authorities[42]. Risk Management - The company faces foreign currency exchange rate risks, primarily due to its operations in China, which could impact reported revenues and cash flows[62]. - The company manages commodity price risks through pricing agreements with suppliers, although its ability to pass on increased costs may be limited by the competitive environment[63]. Employee and Operational Insights - The company employs around 400,000 employees, with approximately 90% being restaurant staff, and about 70% of restaurant employees working part-time[61]. - The company received temporary subsidies from the government for employee benefits and training, which were recognized as reductions in restaurant expenses[21]. Corporate Governance - The company has complied with all corporate governance code provisions during the reporting period, except for certain provisions related to the audit, compensation, and nomination committees[117]. - The company’s governance principles align with the corporate governance code as per the Hong Kong Listing Rules[117]. Future Outlook - The company plans to continue expanding its market presence and investing in new product development to drive future growth[20]. - The company is currently evaluating the potential impact of new accounting standards effective from January 1, 2024, and January 1, 2025, on its financial statements[60].