YUM CHINA-百胜中国：公司季报点评：3Q24业绩表现亮眼，加盟有望赋能增长

Investment Rating - The investment rating for the company is "Outperform" [1] Core Views - The company reported a revenue of $8.708 billion for the first three quarters of 2024, representing a year-on-year growth of 3% [4] - Adjusted net profit for the same period was$ 796 million, up 8% year-on-year [4] - In Q3 2024, revenue reached $3.071 billion, a 5% increase year-on-year, with adjusted net profit growing by 20% to$ 297 million [4] - The diluted EPS for Q3 2024 was $0.77, reflecting a 33% increase compared to the previous year [4] Revenue and Profitability - The company’s same-store sales improved sequentially, with overall sales growth of 4%, 6% for KFC, and 2% for Pizza Hut [4] - The same-store sales declined by 3%, 2%, and 6% for overall, KFC, and Pizza Hut respectively, indicating a recovery to approximately 88% of 2019 levels, an improvement of about 1 percentage point from Q2 [4] - KFC and Pizza Hut's order volumes increased by 1% and 4%, while average transaction prices decreased by 3% and 9% respectively [4] Store Expansion and Performance - As of Q3 2024, the total number of restaurants reached 15,861, with net additions of 1,189 stores in the first three quarters [4] - KFC had 11,283 stores, with net additions of 352 in Q3, while Pizza Hut had 3,606 stores, with 102 net additions [4] - The proportion of new stores in lower-tier cities was 58% for KFC and 60% for Pizza Hut, with franchise stores accounting for 27% and 7% respectively [4] Digitalization and Shareholder Returns - The company is advancing digitalization and delivery services, with over 510 million combined members for KFC and Pizza Hut, and member sales accounting for 64% of total sales [4] - Digital orders contributed$ 2.61 billion, representing 90% of restaurant revenue [4] - Delivery sales grew by 18% year-on-year, making up approximately 40% of restaurant revenue [4] - The shareholder return plan has been increased by 50%, targeting $4.5 billion from 2024 to 2026 [4] Cost Control and Efficiency - The company has successfully reduced costs, with employee costs, property rents, and other operating expenses decreasing as a percentage of restaurant revenue [4] - The cost of materials and consumables accounted for 31.7% of restaurant revenue, up 0.6 percentage points year-on-year [4] - Employee costs represented 25.1% of restaurant revenue, down 0.2 percentage points year-on-year [4] Financial Forecast and Valuation - The company is expected to achieve net profits of$ 901 million, $963 million, and$ 1.048 billion for 2024, 2025, and 2026 respectively, with growth rates of 8.9%, 6.9%, and 8.9% [4] - The estimated reasonable value range for the stock is between HKD 354.0 and HKD 432.7 per share based on a PE ratio of 18-22 times for 2025 [4]