Investment Rating - The investment rating for the company is "Outperform" [1][3][18]. Core Views - The company is expected to benefit from frequent consumer promotion policies, and the recent share buybacks reflect management's confidence in the business [3][18]. - The company has shown resilience in same-store sales and expansion pace, with a positive adjusted net profit growth of 7% year-on-year in Q2 2024 [3][5][18]. - The company aims to achieve a revenue of $117.79 billion, $128.98 billion, and $140.98 billion for 2024, 2025, and 2026 respectively, with adjusted net profits of $8.80 billion, $9.58 billion, and $10.46 billion [3][18][22]. Financial Performance Summary - In H1 2024, the company reported revenues of $5.64 billion, a year-on-year increase of 1%, and an adjusted net profit of $499 million, up 2% [3][5]. - In Q2 2024, the company achieved revenues of $2.68 billion, also a 1% increase year-on-year, with an adjusted net profit of $212 million, reflecting a 7% increase [3][5][18]. - The company added a net of 401 new stores in Q2 2024, achieving 49% of its annual target of 1,500 to 1,700 new stores [3][5][18]. Operational Strategy - The company has implemented a cost control strategy that has positively impacted profit margins, with KFC and Pizza Hut restaurant profit margins at 16.2% and 13.2% respectively in Q2 2024 [3][5][10]. - The introduction of entry-level products and a focus on value-for-money has attracted more customers, with same-store transaction volumes increasing [11][12][18]. - The company is actively expanding into lower-tier cities, with 59% of new KFC stores and 57% of new Pizza Hut stores located in these areas [11][15][18]. Future Outlook - The company is expected to continue its positive operational trend in the second half of 2024, supported by recent consumer promotion policies [3][18]. - The projected earnings per share (EPS) for 2024-2026 are $2.30, $2.51, and $2.74, with corresponding price-to-earnings (PE) ratios of 20.1, 18.5, and 17.0 [3][18][22]. - The target price for the stock is set between HKD 411.5 and HKD 447.3, indicating a potential upside of 14% to 23.9% from the latest closing price [3][18][19].
百胜中国：促消费政策频出经营望受益，持续回购彰显管理层信心