Investment Rating - The report maintains an "Accumulate" rating for Yum China (9987.HK) [1] Core Insights - In Q4 2025, the company achieved revenue of $2.823 billion, a 9% increase year-over-year, with operating profit rising by 25% to $187 million, and net profit attributable to shareholders increasing by 24% to $140 million. For the entire year, revenue reached $11.797 billion, up 4%, with operating profit at $1.290 billion (+11%) and net profit at $929 million (+2%) [2] - The company returned $539 million to shareholders in Q4 2025, totaling $1.5 billion for the year, with plans to maintain this level of shareholder return in 2026 [2] Summary by Sections Same-Store Sales and Store Expansion - The company reported same-store sales growth for three consecutive quarters, with system sales and same-store sales increasing by 7% and 3% year-over-year in Q4 2025, respectively. A total of 587 new stores were added in the quarter, bringing the annual total to 1,706 new stores, with 31% being franchise stores [3] - By brand, KFC saw system sales and same-store sales growth of 8% and 3% in Q4 2025, respectively, with 357 new stores opened. For the year, KFC's system sales and same-store sales grew by 5% and 1%, respectively, with 1,349 new stores [3] - Pizza Hut experienced system sales and same-store sales growth of 6% and 1% in Q4 2025, with 146 new stores opened. For the year, system sales and same-store sales grew by 4% and 1%, respectively, with 444 new stores [3] New Store Formats and Innovations - The company is expanding its product offerings and store formats to reach a broader customer base. K Coffee and KPRO have shown rapid growth, with K Coffee in 2,200 stores and KPRO expected to double to over 400 stores in 2026. Pizza Hut has successfully entered around 100 new towns with the WOW store model [4] - The company has introduced the "Twin Stars" model, placing KFC and Pizza Hut stores adjacent to each other to penetrate lower-tier markets at a lower cost, with approximately 40 pairs of "Twin Stars" stores opened and plans for accelerated expansion in 2026 [4] Cost Management and Profitability - In Q4 2025, the company's operating profit margin and restaurant profit margin improved to 6.6% and 13.0%, respectively, benefiting from operational efficiencies and favorable raw material prices. KFC's operating profit margin was 10.5%, while Pizza Hut's was 3.7% [5] - The company reported a decrease in the proportion of food and packaging costs by 0.3 percentage points year-over-year, while labor costs increased by 1.2 percentage points. Rental and other expenses decreased by 1.6 percentage points, with delivery sales accounting for 53% of total sales, an increase of 11 percentage points [5] Financial Forecast and Valuation - The report adjusts previous profit forecasts and introduces projections for 2028, estimating revenues of $12.522 billion, $13.264 billion, and $13.983 billion for 2026, 2027, and 2028, respectively. Net profits are projected at $1.015 billion, $1.127 billion, and $1.228 billion for the same years [6] - The latest stock price corresponds to a price-to-earnings ratio of 19, 17, and 16 times for 2026, 2027, and 2028, respectively, maintaining the "Accumulate" rating [6]
百胜中国（09987）：同店增长环比提速，多元门店形态贡献增量