Investment Rating - The investment rating for Yum China (09987.HK) is "Outperform the Market" [6][4][21] Core Views - The company has shown resilience in same-store sales, achieving positive growth for three consecutive quarters, with a projected same-store sales growth of 0-2% for 2026 [2][10][21] - The company plans to accelerate store expansion, expecting to add over 1,900 new stores in 2026, with a total store count projected to exceed 20,000 by the end of 2026 [3][20][21] - The company is focusing on enhancing its delivery services and product innovation, which are expected to drive continued improvement in same-store performance [4][21] Financial Performance - In Q4 2025, the company reported a revenue of $2.823 billion, a year-on-year increase of 8.8%, and a net profit of $140 million, up 21.7% [9][4] - The operating profit for Q4 2025 was $187 million, reflecting a 23.8% increase year-on-year, with an EPS of $0.40 [9][4] - The KFC division generated $2.125 billion in revenue, up 8.75%, while the Pizza Hut division reported $540 million, a 5.9% increase [9][4] Store Expansion and Franchise Growth - The company added 587 new stores in Q4 2025, with a total of 18,101 stores by the end of the year, including 12,997 KFC and 4,168 Pizza Hut locations [11][20] - The franchise ratio for KFC and Pizza Hut reached 15% and 8% respectively by the end of 2025, indicating a continued shift towards franchising [11][20] Cost Structure and Profitability - In Q4 2025, labor costs accounted for approximately 29.3% of total expenses, reflecting a year-on-year increase of 1.1 percentage points, primarily due to rising delivery costs [3][18] - The restaurant profit margin improved to 13.0%, up 0.7 percentage points year-on-year, driven by revenue leverage [3][18] - The company expects to return approximately $1.5 billion to shareholders in 2026, with annual returns projected to be between $900 million and over $1 billion from 2027 to 2028 [20][21]
百胜中国：同店收入连续3季度正增，2026年门店扩张提速-20260206