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].

Investment Rating - The investment rating for the company is "Buy" and is maintained [2] Core Views - The company achieved a total revenue of $2.68 billion in Q2 2024, a year-on-year increase of 1%, with operating profit reaching $266 million, up 4% year-on-year, both setting new records for Q2 [1] - The company continues to expand its store network, with a total of 15,423 stores as of June 30, 2024, including 10,931 KFC and 3,504 Pizza Hut locations [1] - System sales increased by 4% year-on-year in Q2 2024, driven by an 8% contribution from net new stores [1] - Same-store sales have declined for two consecutive quarters, with Q2 2024 showing a decrease of 4% overall, 3% for KFC, and 8% for Pizza Hut [1] - The company reported a significant increase in delivery sales, which grew by 11% year-on-year, with digital orders accounting for 90% of restaurant revenue [1] - The company is focused on optimizing its menu and processes, leveraging automation and AI technology to enhance operational efficiency [1] - The management has committed to returning approximately $2.49 billion to shareholders in Q2 2024 through stock buybacks and cash dividends, with a total of nearly $1 billion returned year-to-date [1] Financial Summary - The company projects revenues of $11.15 billion, $12.00 billion, and $13.00 billion for 2024, 2025, and 2026 respectively, with net profits of $847 million, $917 million, and $1.007 billion for the same years [3][4] - The current price-to-earnings (P/E) ratios are projected to be 15x, 14x, and 13x for 2024, 2025, and 2026 respectively [1][4] - The company has a total market capitalization of approximately HKD 101.38 billion [2]

Financial Performance - Total revenue grew by 1% to $5.64 billion, or 5% excluding foreign currency translation effects[1] - Net profit attributable to Yum China Holdings, Inc. was $499 million, up from $486 million in the prior year[6] - Net profit for the six months ended June 30, 2024, was $535 million, compared to $527 million in the same period of 2023, reflecting a year-over-year increase of 1.5%[8] - Comprehensive income, including non-controlling interests, was $424 million, compared to $282 million in the previous year[7] - Diluted earnings per share rose by 10% to $1.26, or 14% excluding foreign currency translation effects[2] - The company reported a significant operating profit margin, with total costs and expenses netting $4.390 billion, resulting in an operating profit of $1.244 billion[60] - The effective tax rate for the six months ended June 30, 2024, was 26.2%, a decrease from 27.0% in 2023, primarily due to a reduction in non-deductible items[51] - The actual tax rate for the six months ended June 30, 2024, was 26.2%, slightly lower than 27.0% in the same period of 2023[100] Store Operations - System sales increased by 5% year-over-year, driven by an 8% contribution from net new store openings, partially offset by a decline in same-store sales[1] - The total number of stores reached 15,423, with 10,931 KFC and 3,504 Pizza Hut locations, adding a net of 779 stores during the period[1] - Same-store sales reached 97% of the prior year's level, despite strong performance in the same period last year[1] - The company plans to open approximately 1,500 to 1,700 new stores in fiscal year 2024[78] - The number of self-operated restaurants increased by 13% to 13,278 from 11,747 year-over-year[77] Shareholder Returns - Yum China returned nearly $1 billion to shareholders through stock buybacks and cash dividends, exceeding the total for the entire year of 2023[2] - The company paid a cash dividend of $0.26 per share for the fiscal year ending December 31, 2023[10] - The estimated cash dividend of $0.16 per share for Yum China common stock totals approximately $61 million, payable on September 17, 2024[59] - The board authorized an increase in the stock repurchase program by $1 billion, totaling $3.4 billion[111] Cash Flow and Liquidity - Cash generated from operating activities for the six months ended June 30, 2024, was $843 million, down from $924 million in the same period of 2023, representing a decrease of 8.8%[8] - Cash and cash equivalents decreased to $1,043 million as of June 30, 2024, from $1,128 million as of December 31, 2023, a decline of 7.5%[9] - The total cash and cash equivalents reported as of June 30, 2024, is $1.305 billion, indicating a strong liquidity position[61] Capital Expenditures and Investments - The company reported a capital expenditure of $358 million for the six months ended June 30, 2024, compared to $332 million in the same period of 2023, reflecting an increase of 7.8%[8] - Capital expenditures for the fiscal year 2024 are expected to range between $700 million and $850 million[110] - The company completed the acquisition of a 28% stake in Hangzhou Beverage for $255 million, gaining control of Hangzhou KFC with approximately 60% ownership[15] Debt and Liabilities - Total liabilities increased to $5,086 million as of June 30, 2024, compared to $4,912 million as of December 31, 2023, marking an increase of 3.5%[9] - The company reported short-term bank borrowings of $416 million as of June 30, 2024, significantly up from $168 million as of December 31, 2023[39] - The company's debt-to-equity ratio was 6.4% as of June 30, 2024, compared to 2.4% as of December 31, 2023[115] Revenue Breakdown - Company restaurant revenue for KFC was $4,120 million and for Pizza Hut was $1,137 million, totaling $5,289 million[25] - The company reported revenue from external customers for KFC at $4,244 million and for Pizza Hut at $1,135 million for the six months ended June 30, 2024, totaling $5,637 million[54] - Franchise fee income amounted to $46 million, with KFC contributing $32 million and Pizza Hut $4 million[25] Operational Efficiency - The company has a centralized procurement system for most food and packaging materials, which enhances operational efficiency and revenue generation[22] - The company recognized unrealized gains from its investment in Meituan of $16 million for the six months ended June 30, 2024, compared to a loss of $29 million for the same period in 2023[18] Tax and Regulatory Matters - The company continues to monitor regulatory developments related to the Corporate Alternative Minimum Tax (CAMT) and its potential impact on financial statements[51] - The company is undergoing a tax audit by Chinese tax authorities regarding transfer pricing arrangements, which may have a significant adverse impact on its financial condition and cash flow if additional taxes are assessed[105] Market Position and Strategy - Yum China Holdings, Inc. operates 15,423 restaurants across over 2,100 cities in China as of June 30, 2024, making it the largest restaurant company in the country by system sales[70] - KFC is the leading fast-food brand in China, with 10,931 restaurants operating in over 2,100 cities as of June 30, 2024[70] - The company believes there are significant further expansion opportunities within China, focusing on both existing and new cities[70] Impairment and Asset Management - The company recognized impairment charges of $7 million for restaurant-level assets for the six months ended June 30, 2024, compared to $14 million for the same period in 2023[50] - The company utilizes a two-step impairment loss measurement for long-term assets under US GAAP, which may differ from the one-step approach under IFRS[68]

Investment Rating - The investment rating for Yum China (09987) is "Buy" [5] Core Views - The company achieved a net profit of $212 million in Q2 2024, exceeding expectations, with total revenue of $2.679 billion, a year-on-year increase of 1% [1] - The growth in revenue is primarily driven by a rapid increase in new store openings, with a total store count growing by 13% year-on-year [1] - Cost reduction and efficiency improvements have significantly contributed to profit growth, with the profit margin for Pizza Hut restaurants increasing by nearly 1 percentage point [2] - The company maintains its commitment to a $1.5 billion shareholder return for the year, having completed nearly $1 billion in the first half of 2024 [1] Summary by Sections Financial Performance - In Q2 2024, the company reported operating income of $266 million, a year-on-year increase of 4%, and a net profit of $212 million, up 8% year-on-year [1] - Revenue growth is attributed to new store openings and effective cost management, with overall management expense ratio improving by approximately 1 percentage point [2] Store Expansion - The company continues its expansion trend, with KFC and Pizza Hut store counts increasing by 14% year-on-year [3] - The company aims to open 1,500 to 1,700 new stores within the year, with a focus on innovative store formats like KFC Coffee and Pizza Hut's "Wow" stores [3] Profit Forecast and Valuation - Yum China is projected to achieve revenues of $11.332 billion, $12.316 billion, and $13.251 billion from 2024 to 2026, with year-on-year growth rates of 3%, 9%, and 8% respectively [4] - The net profit forecast for the same period is $852 million, $940 million, and $1.019 billion, with corresponding year-on-year growth rates of 3%, 10%, and 8% [4] - The company is expected to maintain a price-to-earnings ratio (P/E) of 15x, 14x, and 13x for the years 2024, 2025, and 2026 respectively [4]

Investment Rating - The report maintains a "Buy" rating for Yum China (09987 HK) [1][3] Core Views - Yum China achieved record-high revenue in Q2 2024 with refined cost management driving profit growth [1] - The company's digital transformation continues to progress with digital orders accounting for 90% of restaurant revenue in H1 2024 [1] - Yum China has returned $994 million to shareholders through buybacks and dividends year-to-date exceeding the full-year 2023 amount [1] Financial Performance Revenue and Profit - Q2 2024 revenue reached $2 68 billion up 0 94% YoY (4% excluding currency impact) [1] - Operating profit grew 3 50% YoY to $266 million (7% excluding currency impact) [1] - Net profit increased 7 61% YoY to $212 million (11% excluding currency impact) [1] Segment Performance KFC - Q2 2024 revenue reached $2 014 billion up 1 5% YoY (5% excluding currency impact) [1] - Operating profit declined 3 3% YoY to $264 million while core operating profit grew 3 8% to $273 million [1] - Restaurant margin was 16 2% down 1 1 percentage points YoY [1] Pizza Hut - Q2 2024 revenue was $540 million down 2 5% YoY (1% excluding currency impact) [1] - Operating profit increased 13% YoY to $40 million (18% excluding currency impact) [1] - Restaurant margin improved to 13 2% up 0 8 percentage points YoY [1] Store Expansion - Total store count reached 10 931 for KFC and 3 504 for Pizza Hut as of H1 2024 [1] - Net new store additions were 328 for KFC and 79 for Pizza Hut in Q2 2024 [1] Digital Transformation - Digital order revenue reached $2 2 billion in H1 2024 accounting for 90% of restaurant revenue [1] - Combined membership for KFC and Pizza Hut exceeded 495 million with member sales accounting for 65% of system sales [1] Financial Projections - 2024-2026 revenue is projected to grow at a CAGR of 9% reaching $13 787 billion by 2026 [2] - Net profit is expected to grow at a CAGR of 14% reaching $1 066 billion by 2026 [2] - EPS is forecasted to increase from $2 13 in 2024 to $2 77 in 2026 [2] Valuation - Current P E ratios are 16x for 2024 15x for 2025 and 12x for 2026 [1] - P B ratios are projected to decline from 1 9x in 2024 to 1 6x in 2026 [2]

百胜中国 20240806 1 【Q2 业绩会纪要】 【CEO 】 公司今日发布二季度业绩情况，系统销售额在去年同期增长 32%的基础上增长 4%。核心营业利润增长 12%，达到 2.75 亿 美元。每股收益增长 19%。我要感谢同事们的辛勤工作和创新 精神,在复杂多变的环境中我们凭借行业领先的能力和技能将许 多挑战变为机遇。我们正在将这些情况转化为我们的竞争优势， 并且我们已经采取了积极的措施来增加收入和弹性。 我想强调其中的三个。首先，我们重新审视了我们业务中的每一 个关键流程和成本要素 ，然后进行了商业创新以提高我们的运 营效率，增强盈利能力和弹性。可以看到我们正在实现重大成本 节约并将其再投资于食品和价值。其次，我们扩大了目标市场， 并通过高度重视性价比和创新产品来保持市场份额。第二季度我 们的交易额和外卖销售均实现了两位数的增长。我们将继续创新 产品以满足客户的需求。第三，突破性的商业模式已经在肯悦咖 啡和必胜客 Wow 店取得了优秀的初步成果。这些门店实现了同 店销售额和利润的增长，显示出了巨大的潜力，这证明了这些策 略运作良好。这个第二季度是我们自分拆上市以来以来最赚钱的 第二季度，营业利润率扩 ...

Investment Rating - The report maintains a "Buy" rating for Yum China (9987.HK) [4] Core Insights - The company reported a strong profit performance in Q2 2024, with revenue of $2.679 billion, a year-over-year increase of 1% (4% excluding currency effects) [2] - Operating profit reached $266 million, up 4% year-over-year, with an operating margin of 9.9%, reflecting a 0.2 percentage point increase [2] - The company is focusing on improving operational efficiency and optimizing store formats, which has led to better-than-expected profit performance despite slight revenue pressure [2][3] Summary by Sections Financial Performance - Q2 revenue was $2.679 billion, with a year-over-year growth of 1% (4% excluding currency effects) [2] - Operating profit was $266 million, a 4% increase year-over-year, with an operating margin of 9.9% [2] - Net profit for Q2 was $212 million, an 8% increase year-over-year, with a net margin of 7.9% [2] Operational Efficiency - The company has improved its cost control, with a restaurant operating profit margin of 15.5% in Q2 [2] - KFC's operating profit margin was 16.2%, while Pizza Hut's was 13.2%, showing varied performance across brands [2] - The company is implementing projects like "Fresh Eye" and "Red Eye" to optimize operational processes and reduce labor costs [2] Same-Store Sales and Growth Initiatives - Same-store sales decreased by 4%, with KFC down 3% and Pizza Hut down 8% [3] - The company is launching new store formats like K COFFEE and WOW to drive same-store growth [3] - A total of 401 new restaurants were opened in Q2, with a plan to add 1,500-1,700 new stores throughout the year [3] Shareholder Returns - The company returned $249 million to shareholders in Q2 through buybacks and cash dividends, with a total of $994 million returned year-to-date [3] - The annual shareholder return target is $1.5 billion, with 66% of this target already achieved [3] Future Projections - Projected net profits for 2024-2026 are $878 million, $968 million, and $1.053 billion, respectively [4] - Expected EPS for the same period is $2.28, $2.51, and $2.73, with corresponding P/E ratios of 14, 13, and 12 [4]

Investment Rating - The report maintains a rating of "Buy" for Yum China (9987) [2][3] Core Views - Despite a slight decline in same-store sales, the company's cost control exceeded expectations, indicating strong operational management capabilities. The company is expected to provide high returns to shareholders through dividends and buybacks [3] Summary by Sections Financial Performance - For Q2 2024, total revenue reached $2.68 billion, reflecting a 1% increase (4% excluding currency effects). Operating profit was $266 million, up 4% (7% excluding currency effects), and net profit was $212 million, up 8% (11% excluding currency effects). Adjusted net profit was $266 million, up 3% (6% excluding currency effects) [3] - The company plans to return $3 billion to shareholders through dividends and buybacks from 2024 to 2026. Expected EPS for 2024-2026 are $2.16 (-0.08), $2.45 (-0.04), and $2.71 (-0.01), representing year-on-year growth of 8%, 14%, and 10% respectively [3] Store Expansion and Sales - As of H1 2024, the total number of stores reached 15,423, a 13% year-on-year increase. In Q2 2024, 401 new stores were added, with 99 being franchise stores, accounting for 25% of the new openings. KFC added 328 new stores, totaling 10,931, a 14% year-on-year increase, while Pizza Hut added 79 new stores, totaling 3,504, also a 14% increase [3] - Same-store sales experienced a year-on-year decline of 4% in Q2 2024, with KFC down 3% and Pizza Hut down 8%. This performance is at 86.7% of the same period in 2019 [3] Operational Efficiency - The restaurant profit margin for Q2 2024 was 15.5%, up 0.6 percentage points year-on-year. KFC's profit margin was 16.2%, down 1.1 percentage points, while Pizza Hut's profit margin was 13.2%, up 0.8 percentage points. The improvement in Pizza Hut's margin was primarily due to enhanced operational efficiency [3] - Menu innovations and streamlined processes have contributed to improved operational efficiency, with new products like the Pizza Dough Burger performing well. The company is also piloting new store formats to enhance customer experience [3]