Summary of YUM China Conference Call Company Overview - **Company**: YUM China - **Key Brands**: KFC, Pizza Hut - **Market Position**: Leading market share in the domestic chain restaurant sector, approximately 8% market share [7] Financial Performance - **2025 Revenue**: $11.797 billion, adjusted net profit of $929 million, with year-on-year growth of 4% and 2% respectively [2][13] - **CAGR (2019-2025)**: Revenue CAGR of approximately 6%, net profit CAGR of about 4% [2][13] - **KFC Contribution**: 75% of total revenue, Pizza Hut contributes 20% [2][13] Future Projections - **2026-2028 Expectations**: Same-store sales growth of 0-2%, system sales growth in the high single digits, operating profit growth in the high single digits, and double-digit EPS growth [2][16][31] - **Store Expansion Goal**: Targeting over 30,000 stores by 2030, with plans to increase store count from approximately 18,100 in 2025 [2][17][32] Brand Performance KFC - **Store Count**: Approximately 13,000 stores in China by the end of 2025 [2][20] - **Sales Growth**: System sales and total revenue growth of approximately 5% and 4% respectively, with a restaurant profit margin of 17.4% [2][20] - **Expansion Plans**: New store formats like K Pro, K Coffee, and mini-stores, aiming for 17,000 stores by 2028 [2][21] Pizza Hut - **Store Count**: Approximately 4,200 stores in China by the end of 2025 [2][22] - **Delivery Share**: 48% of sales from delivery, with membership numbers reaching 590 million [2][22] - **Future Goals**: Maintain high single-digit CAGR for system sales and double-digit growth for operating profit, aiming for over 6,000 stores by 2028 [2][22] Industry Insights - **Restaurant Industry Recovery**: Positive trends in the restaurant industry for Q1 2026, with improved same-store sales and customer spending [3] - **Market Size**: The chain restaurant market in China is approximately ¥1.26 trillion, with significant growth potential, especially in lower-tier cities [5][19] - **Urbanization Impact**: Urbanization rate increasing from 61% in 2019 to 67% in 2024, driving market opportunities in lower-tier cities [19] Operational Efficiency - **AI Implementation**: Enhanced operational efficiency with a 55% increase in marketing effectiveness and a 170 basis point reduction in rent costs as a percentage of sales [3][30] - **Capital Expenditure Reduction**: KFC and Pizza Hut reduced capital expenditures by 35% and 50% respectively [3][30] Franchise Model - **Franchise Expansion**: Plans to increase franchise stores to over 5,000 by 2030, representing more than 20% of total stores [3][18] Consumer Trends - **Single Dining Market Growth**: Significant growth in the single dining market, prompting adjustments in menu pricing and offerings [23] - **New Store Formats**: Introduction of satellite stores and dual-brand stores (KFC and Pizza Hut) to cater to evolving consumer preferences [28] Conclusion YUM China is positioned for growth with a strong market presence, innovative expansion strategies, and a focus on operational efficiency. The company aims to leverage its leading brands, KFC and Pizza Hut, to capitalize on the recovering restaurant industry and urbanization trends in China.

Market Overview - The A-share market experienced a significant rebound, with the Shanghai Composite Index surpassing 4100 points, closing at 4123.09 points, up 1.41% [2][7] - All major indices rose, with the Shenzhen Component Index and ChiNext Index increasing by 2.17% and 2.98% respectively, indicating strong market performance [7] - The overall market turnover reached 2.27 trillion yuan, reflecting a 4.9% increase from the previous trading day, maintaining high trading activity [7] Sector Performance - The technology and photovoltaic sectors led the market rally, with notable gains in communication, media, electronics, and computer sectors, which rose by 5.07%, 3.47%, 2.95%, and 2.84% respectively [6][7] - The media sector saw stocks like Zhongwen Online and Zhangyue Technology hitting the daily limit, driven by advancements in AI video generation technology [6] - The photovoltaic index surged by 5.72%, with companies like GCL-Poly and Aiko Solar reaching their daily limits, supported by ambitious solar capacity targets set by Tesla and SpaceX [6] Bond Market - The government bond futures market saw a slight increase across all maturities, with the 30-year contract rising by 0.14% to 112.73 yuan [11] - The overall sentiment in the bond market improved, supported by a net liquidity injection of 38 billion yuan by the central bank [11] - The downward trend in interest rates and ongoing demand for safe-haven assets are expected to continue driving bond market performance [11] Commodity Market - The commodity index rose by 0.98%, with precious metals and non-ferrous metals showing strong recovery, while chemical products faced downward pressure [10] - Gold prices increased slightly, with the central bank continuing to accumulate gold reserves, which reached 7.419 million ounces by the end of January [10] - The market for canola experienced a decline of 2.54% due to supply pressures, as Canada prepares to resume exports to China [13] Investment Opportunities - The report highlights potential investment opportunities in sectors such as photovoltaic technology, commercial aerospace, and AI applications, driven by policy support and technological advancements [8][14] - The recommendation is to maintain a balanced allocation between technology and consumer sectors, with a focus on buying during market dips [17] - The report suggests that the upcoming release of CPI and PPI data may further influence market sentiment and investment strategies [8]

Investment Rating - Industry rating: Positive (maintained) [1] Core Insights - The media sector experienced a weekly decline of 3.24% due to the impact of AI model discussions in the US stock market. However, certain stocks like Hengdian Film (up 30.98%), Happiness Blue Sea (up 7.45%), and Bona Film (up 7.40%) performed well, alongside Perfect World, which saw a 3.87% increase following the positive results of its game "Yihuan" [1] - The report emphasizes the importance of AI applications, particularly in the context of major companies' marketing strategies during the Spring Festival, with Tencent and Alibaba launching significant promotional campaigns [1] - The report highlights the successful third test of Perfect World's "Yihuan," which is expected to exceed initial revenue forecasts, potentially leading to a 40%+ upward revision in earnings estimates for 2026 [1] Summary by Sections AI Applications - Major companies are enhancing their AI capabilities, with Tencent launching a "Yuanbao" red envelope activity worth 1 billion and Alibaba's "Qianwen" offering 3 billion in red envelopes, achieving over 10 million orders in just 9 hours [1] - Updates on multimodal AI models include Kuaishou's 3.0 version and ByteDance's Seedance 2.0, indicating a competitive landscape in AI tool development [1] Game Industry Updates - Perfect World's "Yihuan" has undergone 68 optimizations, leading to positive industry feedback. The expected annual revenue for "Yihuan" has been revised upwards to 60 billion, with a projected net profit of 36 billion for the first year [1] - Other notable companies in the gaming sector include Giant Network and Huatuo, which are also focusing on commercializing their products during the Spring Festival [1] Recommended Stocks - Key stocks to watch include ByteDance, Kuaishou, Kunlun Wanwei, and various companies within the AI application and animation sectors, such as Chinese Online and Huayi Brothers [1]

证券分析师 022-28451618 SAC NO：S1150511010016 cuijian@bhzq.com 晨会纪要（2026/02/06） 市场处于震荡整固阶段，结构性行情将是重点——A 股市场 2026 年 2 月投资 策略报告 行业研究 关注年报业绩催化与创新药械产业链——医药生物行业 2 月投资策略展望 崔健 渤海证券研究所晨会纪要（2026.02.06） 宏观及策略研究 晨会纪要（2026/02/06） 宏观及策略研究 市场处于震荡整固阶段，结构性行情将是重点——A 股市场 2026 年 2 月投资策略报告 请务必阅读正文之后的声明 渤海证券股份有限公司具备证券投资咨询业务资格 1 of 6 要 宋亦威（证券分析师，SAC NO：S1150514080001） 云计算提价印证高景气，AI 应用迎来多点催化——计算机行业 2 月投资策略 展望 证 券 研 究 报 告 晨 会 纪 严佩佩（证券分析师，SAC NO：S1150520110001） 靳沛芃（研究助理，SAC NO：S1150124030005） 1、宏观方面 2026 年年初，出口端在结构优化、产品竞争优势以及经贸环境改善的支撑下将 ...

Market Overview - On February 3, 2026, the Shanghai Composite Index rose by 1.29%, the CSI 300 increased by 1.18%, the STAR 50 gained 1.39%, the CSI 1000 climbed 2.93%, the ChiNext Index went up by 1.86%, and the Hang Seng Index saw a slight increase of 0.22% [4][5] - The best-performing sectors on February 3 were comprehensive (+5.63%), defense and military industry (+4.42%), machinery and equipment (+3.98%), building materials (+3.52%), and steel (+3.28%). The banking sector was the worst performer, declining by 0.85% [4][5] - The total trading volume for the A-share market on February 3 was 25,656 billion, with a net inflow of 9.52 million Hong Kong dollars from southbound funds [4][5] Key Insights - The macroeconomic outlook for January 2026 indicates that the economy is in a data vacuum period, with macro information primarily coming from price and financial data. It is expected that January's prices will recover but with limited elasticity, and while the overall financial volume is not poor, the "opening red" characteristic is not strong [6] - The market anticipates a "credit opening red," but the report suggests that this characteristic is not clearly evident. The demand side remains weak in January [6] - In terms of major assets, the equity market is expected to strengthen in 2026, driven by liquidity, with a structural market characterized by low volatility dividends and technology growth. The bond market is projected to see the 10-year government bond yield fluctuate between 1.5% and 2% [6] Industry Commentary - The Chinese New Year film lineup has been preliminarily set, with attention on companies such as Bona Film Group, Hengdian Film, Happiness Blue Sea, and Damai Entertainment. The report highlights the competition for the New Year’s red envelope among major companies [7] - Investment opportunities are identified in the New Year film lineup and the ongoing AI application debate. Companies in the gaming sector, such as Perfect World, Huatuo, and Gigabit, are noted for their annual forecasts meeting or exceeding expectations, with Giant Network achieving a new high of 10 million daily active users [7][8]

Investment Rating - The industry investment rating is "Positive" (maintained) [2][7] Core Insights - The report highlights the initial lineup of films for the Spring Festival, including "Fast Life 3," "Biao Ren," and "Silent Awakening," with a projected box office target of 8 billion for the 2026 Spring Festival, comparable to the 2024 Spring Festival [2][3] - The report emphasizes the importance of major companies in the film industry, such as Bona Film Group and DMG Entertainment, with estimated box office contributions for the films ranging from 5 billion to 30 billion [2][3] - The report also discusses the ongoing competition among major tech companies in the AI application sector, suggesting a focus on long-term quality investments in companies with strong AI capabilities [2][4] Summary by Sections Spring Festival Film Lineup - Six films have been confirmed for the 2026 Spring Festival, with projected box office revenues as follows: - "Fast Life 3": 2.5 to 3 billion - "Biao Ren: Wind Rises in the Desert": over 2 billion - "Silent Awakening": over 1.5 billion - "Star River Dream": approximately 500 million - "Boonie Bears: Year of the Bear": approximately 500 million - "Panda Plan: Tribal Adventure": less than 500 million [2][3] Key Companies and Performance - Notable companies involved in the Spring Festival films include: - Bona Film Group, DMG Entertainment, and Happiness Blue Sea, among others [3] - The report also mentions key gaming companies like Perfect World and Century Huatong, with significant profit forecasts for 2025, indicating strong growth potential in the gaming sector [2][4] Investment Opportunities - The report suggests focusing on companies with a robust AI ecosystem and those benefiting from the acceleration of AI applications, including: - ByteDance, Tencent, and Alibaba-related companies [2][4] - Specific companies highlighted for potential investment include: - DeepSeek, Kuaishou, and various media and entertainment firms [2][4]

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Company Overview - Sichuan Junyi Digital Technology Co., Ltd. has expanded its business from smart city solutions to digital economy and AI applications, providing digital and information products and solutions [2] - The main business includes comprehensive solutions for digitalization and informatization, with a second growth curve focusing on the optical field [2] Business Growth - The growth rate of the smart city-related business is stable, primarily due to a low base, but it continues to maintain certain growth [3] - Annual order growth in existing segments, particularly in urban renewal (e.g., underground pipeline renovation) and smart water conservancy, is robust, benefiting from special bonds and long-term government bonds [3] AI Development - The company’s layout in the AI sector is driven by its subsidiary Chengdu Haitan AI Data Technology Co., Ltd., focusing on digitalization scenarios for government and enterprises [3] - The subsidiary has secured orders in various fields, including railways, education, and government [3] Investment and Collaboration - The company has increased its investment in Guangdong Guanghong Precision Technology Co., Ltd., with synergies in technology and market development [3] - The optical products from Guanghong Precision enhance the company's capabilities in smart connectivity and digital solutions [3] Low-Code Platform and AI Applications - The low-code machine learning platform developed by Haitan Data integrates mainstream machine learning algorithms for model training, evaluation, deployment, and optimization [4] - The AI City Lifeline model combines with mainstream large models like Tongyi Qianwen and Deepseek, supporting private deployment and data security [4] Future Directions - The company aims to deepen the application of AI in business, integrating technology with industry scenarios, and will disclose relevant progress as per regulations [4] - Current AI applications are generating revenue but are not accounted as independent product lines [4] Risk Warning - The company advises investors to refer to official announcements for business information and warns that discussions on strategic development do not constitute binding commitments [4]

Investment Rating - The report maintains an "Outperform" rating for the media and internet industry [5] Core Insights - The media industry has shown a positive performance with a 0.96% increase, outperforming both the CSI 300 (-0.62%) and the ChiNext Index (-0.34%) during the week of January 12-16 [12][13] - Key companies that performed well include Liansheng Technology, BlueFocus Communication Group, and Tiandi Online, while companies like Liou Holdings and Visual China faced declines [12][13] - The report highlights the acceleration of AI applications and commercialization in the industry, particularly in AI marketing and content services [4][42] Summary by Sections Industry Performance - The media industry increased by 0.96%, ranking 21st among all sectors in terms of performance [12][14] - Notable gainers included Liansheng Technology (34%), BlueFocus (26%), and Tiandi Online (24%) [13] Key Developments - Alibaba's Tongyi announced the open-source Qwen3-TTS series, enhancing voice generation capabilities [2][16] - ByteDance launched a new AI Agent platform, significantly improving workplace efficiency [2][17] - OpenAI is considering a revenue-sharing model based on AI-assisted research outcomes, moving away from traditional usage-based fees [2][18] - Tencent's AI application "Yuanbao" will distribute 1 billion yuan in cash during the Spring Festival, aiming to replicate the success of WeChat red envelopes [2][37] Box Office and Entertainment Data - The box office for the week of January 19-25 reached 261 million yuan, with "Return to Silent Hill" leading at 57 million yuan [19][21] - Popular TV shows included "Little Town Big Events" and "Pride and Prejudice" [24][25] - The gaming sector saw significant revenue from titles like "Whiteout Survival" and "Gossip Harbor" [28][31] Investment Recommendations - The report suggests focusing on AI marketing and content services, with specific attention to companies like Zhejiang Wenlian and Huimai Technology [4][42] - The gaming sector is expected to benefit from a strong product cycle, with companies like Giant Network and 37 Interactive Entertainment highlighted as potential investments [4][42] - In publishing, the report recommends monitoring companies like People's Daily Online and Xinhua News for potential growth [4][42]

Investment Rating - The report maintains an "Outperform" rating for the media and internet industry [5]. Core Insights - The media industry has shown a positive performance, with a 0.96% increase, outperforming both the CSI 300 (-0.62%) and the ChiNext Index (-0.34%) during the week of January 12-16 [12]. - Key companies that performed well include Liansheng Technology, BlueFocus Communication Group, and Tiandi Online, while companies like Leo Group and Visual China faced declines [12]. - The report highlights significant developments in AI applications, particularly in marketing and content services, indicating a strong potential for investment opportunities in these areas [4]. Summary by Sections Industry Performance - The media sector's performance ranked 21st among all sectors, with notable weekly gains [12][14]. - The top gainers included Liansheng Technology (34%), BlueFocus (26%), and Tiandi Online (24%) [13]. Key Developments - Alibaba's Tongyi announced the open-sourcing of the Qwen3-TTS series, enhancing voice generation capabilities [2]. - ByteDance launched a new AI Agent platform, significantly improving workplace efficiency [2]. - Tencent's AI application "Yuanbao" will distribute 1 billion yuan in cash during the Spring Festival, aiming to replicate the success of WeChat red envelopes [2][37]. Box Office and Entertainment Data - The box office for the week of January 19-25 reached 261 million yuan, with "Return to Silent Hill" leading at 57 million yuan [19]. - Popular TV shows included "Little City Big Events" and "Pride and Prejudice" [24][25]. Investment Recommendations - The report suggests focusing on AI marketing and content services, with specific attention to companies like Zhejiang Wenlian and Huimai Technology [4]. - The gaming sector is expected to benefit from a strong product cycle, with companies like Giant Network and 37 Interactive Entertainment highlighted as potential investments [4]. - The publishing industry is also noted for potential growth, particularly with the GEO corpus catalyzing opportunities [4].