Investment Rating - The report maintains a "Buy" rating for the company, with an expected PE ratio of 14.3X for 2024E, 13.0X for 2025E, and 11.8X for 2026E [1] Core Views - The company's 2Q24 revenue reached $2.68 billion, a 1% YoY increase (4% excluding currency impact), with core operating profit at $280 million (+12% excluding currency impact) and net profit attributable to shareholders at $210 million (+8%, +11% excluding currency impact) [1] - Store expansion supported revenue growth, with net new stores contributing 8% to system sales, while same-store sales declined by 4% due to demand pressure [1] - The company's total number of stores reached 15,423 by 2Q24, with a net increase of 401 stores in the quarter [1] - KFC's same-store sales declined by 3% in 2Q24, with a restaurant margin of 16.2% (-1.1pct, -0.6pct excluding comparable items) [1] - Pizza Hut's same-store sales declined by 8% in 2Q24, but restaurant margin improved to 13.2% (+0.8pct, +1.1pct excluding comparable items) [1] - The company returned $994 million to shareholders through dividends and buybacks in 1H24, with plans to distribute $250 million in cash dividends and $1.25 billion in buybacks for the full year 2024 [1] Financial Performance Summary - Revenue is projected to grow from $11.311 billion in 2024E to $13.483 billion in 2026E, with a CAGR of 8.78% [3] - Net profit attributable to shareholders is expected to increase from $874 million in 2024E to $1.059 billion in 2026E, with a CAGR of 9.78% [3] - ROE is forecasted to improve from 15.16% in 2024E to 18.39% in 2026E [3] - The company's P/E ratio is expected to decline from 14.31X in 2024E to 11.82X in 2026E, indicating potential undervaluation [3] Operational Highlights - KFC's K-Coffee store count increased from around 100 in March to approximately 300 by July, leveraging shared kitchen and labor resources for higher efficiency [1] - Pizza Hut's WOW stores, offering lower-priced products, expanded to over 100 locations by July, targeting cost-conscious customers [1] - The company achieved significant cost optimization through automation, labor savings, and improved management efficiency, with overall restaurant margin at 15.5% and management expense ratio at 5.0% in 2Q24 [1]
百胜中国：Q2降本增效，利润超预期