Core Insights - The company achieved revenue of $3.21 billion in Q3 2025, a year-on-year increase of 4% [4] - Adjusted net profit for Q3 2025 was $282 million, a decrease of 5% year-on-year [7] - Core operating profit reached $399 million, reflecting an 8% increase year-on-year, with a core operating profit margin of 12.5%, up 0.4 percentage points [4][6] Store Performance - System sales increased by 4% year-on-year in Q3 2025, with KFC and Pizza Hut growing by 5% and 4% respectively [5] - Same-store sales rose by 1% year-on-year, with KFC and Pizza Hut showing increases of 2% and 1% respectively [5] - KFC's same-store transaction volume increased by 3%, while the average transaction value decreased by 1% due to a rise in small orders [5] - The company opened 536 new stores in Q3 2025, with a total of 17,514 restaurants at the end of the quarter [5] Operational Efficiency - The proportion of food and packaging costs to restaurant revenue was 31.3%, down 0.4 percentage points, benefiting from supply chain efficiency and lower raw material prices [6] - Labor costs accounted for 26.2% of restaurant revenue, up 1.1 percentage points, primarily due to increased delivery service costs [6] - Overall restaurant profit margin improved to 17.3%, an increase of 0.3 percentage points year-on-year [6] New Business Initiatives - The company has expanded its new business lines significantly, with over 1,800 KFC coffee stores and more than 100 KPRO stores in high-tier cities [8] - The WOW concept for Pizza Hut has reached 250 locations, entering 40 new cities [8] - Focus on core, limited-time, and entry-level products has driven sales growth, with KFC's new offerings and Pizza Hut's innovative pizzas performing well [8]

Core Viewpoint - Company maintains profit forecasts for Yum China (09987) with net profit estimates of $1.002 billion and $1.074 billion for 2026 and 2027 respectively, translating to EPS of $2.53, $2.77, and $2.97 for 2025-2027, with current stock price reflecting PE ratios of 17x, 16x, and 15x for the same periods, highlighting its strong digital and supply chain capabilities as a leading Western fast-food enterprise [1] Financial Performance - In Q3 2025, the company achieved revenue of $3.21 billion, a year-on-year increase of 4% (or 4% excluding foreign currency effects), with adjusted net profit of $282 million and core operating profit of $399 million, reflecting a core operating profit margin of 12.5%, up 0.4 percentage points year-on-year [2] Same-store Sales and Expansion - Same-store sales increased by 1% year-on-year in Q3 2025, with KFC and Pizza Hut showing growth of 2% and 1% respectively; KFC's same-store transaction volume rose by 3%, while Pizza Hut's increased by 17%, marking the eleventh consecutive quarter of growth for Pizza Hut [3] - The company opened 536 new stores in Q3 2025, bringing the total to 17,514 restaurants, with KFC and Pizza Hut netting 402 and 158 new locations respectively; the company aims to add 1,600-1,800 new stores in 2025 [3] Operational Efficiency - In Q3 2025, the proportion of food and packaging costs to restaurant revenue was 31.3%, benefiting from supply chain efficiency and lower raw material prices; labor costs accounted for 26.2% of revenue, up 1.1 percentage points year-on-year due to increased delivery business [4] - The overall restaurant profit margin improved to 17.3%, up 0.3 percentage points year-on-year, with KFC and Pizza Hut margins at 18.5% and 13.4% respectively [4] New Business Initiatives - The company has made significant progress with new business initiatives, including over 1,800 KFC coffee locations, more than 100 KPRO stores in high-tier cities, and 250 WOW stores for Pizza Hut, expanding into 40 new cities [5] Product Strategy - The company focuses on core products, limited-time offerings, and entry-level products to drive sales growth; KFC's new crispy chicken wings and Pizza Hut's hand-tossed pizzas have seen strong sales, with limited-time products like spicy beef dishes also performing well [6] - Entry-level products have achieved double-digit sales growth, with KFC exploring options for meals under $20 to attract a broader customer base [6]

Core Insights - The report from Everbright Securities maintains the net profit forecast for Yum China (09987) at $1.002 billion and $1.074 billion for 2026-2027, translating to EPS of $2.53, $2.77, and $2.97 for 2025-2027, with a "buy" rating due to strong digital and supply chain capabilities [1] Financial Performance - In Q3 2025, the company achieved revenue of $3.21 billion, a year-on-year increase of 4% (or 4% excluding foreign currency effects), with adjusted net profit of $282 million and core operating profit of $399 million, reflecting an 8% increase (excluding foreign currency effects) [1][2] - The core operating profit margin was 12.5%, up by 0.4 percentage points year-on-year [1] Same-Store Sales and Expansion - Same-store sales increased by 1% in Q3 2025, with KFC and Pizza Hut showing growth of 2% and 1% respectively; KFC's same-store transaction volume rose by 3% [2] - The company opened 536 new stores in Q3 2025, with a total of 17,514 restaurants at the end of the quarter [2] Operational Efficiency - In Q3 2025, food and packaging costs accounted for 31.3% of restaurant revenue, benefiting from supply chain efficiency and lower raw material prices [3] - The restaurant profit margin improved to 17.3%, up by 0.3 percentage points year-on-year, with KFC and Pizza Hut margins at 18.5% and 13.4% respectively [3] New Business Initiatives - The company has made significant progress with new business initiatives, including over 1,800 KFC coffee stores and more than 100 KPRO locations in high-tier cities [4] - The WOW Pizza Hut stores expanded to 250 locations, entering 40 new cities without a Pizza Hut brand [4] Product Strategy - The focus on core products, limited-time offerings, and entry-level products has driven sales growth, with KFC's new crispy chicken wings and Pizza Hut's new thin-crust pizza performing well [5] - Entry-level products from KFC and Pizza Hut saw double-digit sales growth in the first three quarters of 2025, with KFC exploring options for meals under 20 yuan to attract more customers [5]