Investment Rating - The investment rating for the company is "Outperform the Market" [6][16]. Core Insights - The company has demonstrated steady revenue growth with a year-on-year adjusted net profit increase of over 18% in Q2 2025. Revenue reached 4.669 billion yuan, up 10.0%, and net profit attributable to shareholders was 642 million yuan, up 48.0% [1][9]. - The company is focusing on optimizing profit margins and enhancing user value, with a significant increase in paid users and ARPU (Average Revenue Per User). The total number of paid users reached 250 million, a 10.2% increase year-on-year, and ARPU increased by 13.9% to 72.2 yuan [2][10]. - The management emphasizes the core OTA (Online Travel Agency) business strategy while extending its industry chain layout, aiming to increase the number of hotels under management to 3,000 by the end of the year [3][15]. Revenue Summary - The revenue structure is showing significant upgrades, with international and hotel management sectors experiencing notable growth. Transportation, accommodation, and other businesses grew by 7.9%, 15.2%, and 27.5% year-on-year, respectively [2][10]. - International flight ticket volume increased by nearly 30%, now accounting for over 6% of total transportation revenue, reflecting a shift towards higher-quality hotel accommodations [2][10]. Profitability Summary - The company's gross margin improved by 0.4 percentage points in Q2, driven by enhanced monetization rates in the OTA business and efficiency gains from generative AI reducing customer service processing times [11]. - The sales expense ratio decreased by 2.4 percentage points year-on-year, indicating a focus on balancing marketing investment returns [11][12]. Financial Forecasts - The adjusted net profit forecasts for 2025-2027 have been revised upwards to 3.371 billion, 3.933 billion, and 4.530 billion yuan, respectively, reflecting a positive outlook on profitability and user growth [4][16]. - The projected revenue for 2025 is 19.598 billion yuan, with a year-on-year growth rate of 13.0% [5][18].

Core Viewpoint - The company is expected to maintain a strong growth trajectory with increasing profitability driven by operational efficiency improvements and a favorable market position in the food and beverage industry [1][2]. Financial Performance - For Q2 2025, the company reported revenue of $2.787 billion, a year-on-year increase of 4% (excluding currency effects) [1]. - Operating profit for Q2 2025 was $304 million, up 14% year-on-year, with an operating profit margin of 10.9%, reflecting a 1.0 percentage point increase [1]. - The net profit attributable to shareholders for Q2 2025 was $215 million, a 1% increase year-on-year (excluding currency effects), with EPS rising by 5% [1]. Same-store Sales and Store Expansion - Same-store sales for Q2 2025 increased by 1% year-on-year, with KFC same-store sales also up by 1% and Pizza Hut by 2% [2]. - As of Q2 2025, the total number of stores reached 16,978, a 10% year-on-year increase, with a net addition of 336 stores in Q2 [2]. - KFC had 12,238 stores, a 12% increase year-on-year, while Pizza Hut had 3,864 stores, also a 10% increase year-on-year [2]. Profitability and Operational Efficiency - The restaurant profit margin for Q2 2025 was 16.1%, up 0.6 percentage points year-on-year, with KFC's margin at 16.9% and Pizza Hut's at 13.3% [2]. - Profitability improvements were attributed to favorable raw material prices and operational streamlining, although increased delivery costs and rising wages partially offset these gains [2].