Group 1 - The article provides an update on Yum China Holdings (NYSE: YUMC) following a previous buy recommendation due to a robust growth outlook [1] - The author emphasizes a fundamentals-based approach to value investing, focusing on companies with long-term durability and strong balance sheets [1] - There is a common misconception that low multiple stocks are necessarily cheap, but the author argues that price matters less when the growth potential is significant [1] Group 2 - The article does not contain any disclosures related to stock positions or business relationships with the companies mentioned [2] - It is noted that past performance does not guarantee future results, and no specific investment advice is provided [3]

Core Insights - Yum China Holdings, Inc. (YUMC) reported fourth-quarter 2024 results with earnings exceeding expectations but revenues falling short, showing year-over-year growth in both metrics [1][3]. Financial Performance - Adjusted earnings per share (EPS) for Q4 were 30 cents, beating the Zacks Consensus Estimate of 29 cents by 3.5%, and reflecting a 20% increase year-over-year [3]. - Total revenues reached $2,595 million, missing the consensus estimate of $2,638 million, but still showing a 4% year-over-year increase [3]. - Total costs and expenses were $2.44 billion, slightly below the expected $2.51 billion, while the restaurant margin improved to 12.3%, up 160 basis points year-over-year [5]. - Adjusted net income was $115 million, compared to $103 million in the prior-year quarter, aligning closely with the estimate of $114.1 million [6]. Operational Highlights - Total system sales, excluding foreign currency translation, increased by 4% year-over-year, driven by a net new unit contribution of 5% [4]. - Same-store sales reached 99% of the previous year's level, with same-store transactions growing by 4% year-over-year [4]. - Yum China opened 534 net new stores in Q4, bringing the total restaurant count to 16,395 [9]. Shareholder Returns - The company announced a 50% increase in its cash dividend to 24 cents per share, scheduled for payment on March 27, 2025 [8]. - Yum China aims to return $4.5 billion to shareholders between 2024 and 2026, having delivered a record $1.5 billion in returns in 2024 [7]. Future Outlook - Yum China expects to open between 1,600 and 1,800 net new stores in 2025, with capital expenditures projected to be between $700 million and $800 million [11]. - The company anticipates a steady increase in the proportion of net new franchised stores, targeting 40-50% for KFC and 20-30% for Pizza Hut in the coming years [10].

Fourth Quarter and Fiscal Year 2024 Results 6 February 2025 NYSE: YUMC and HKEX: 9987 Cautionary Statement This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not rel ...

Financial Data and Key Metrics Changes - In Q4 2024, system sales grew 4% year over year, with same-store sales index improving to 99% of prior year levels [7][27] - Core operating profit increased by 35%, with diluted EPS growing by 22% [8][33] - For the full year, system sales grew 5%, and net income reached $911 million, up 13% year over year [35][36] Business Line Data and Key Metrics Changes - KFC system sales increased by 6% in 2024, with a same-store sales index reaching 99% of prior year levels [14][27] - Pizza Hut achieved a 5% growth in same-store transactions and opened a record 412 net new stores [19][20] - The retail segment saw over 30% sales growth and became profitable in 2024 [24] Market Data and Key Metrics Changes - KFC expanded its delivery sales by 16%, continuing a decade-long double-digit growth trend [10] - Pizza Hut's ticket average was 10% lower year over year, aligning with its strategy to become more mass-market [29] - The company opened a record 1,751 net new stores in 2024, ending the year with 16,395 stores [8][35] Company Strategy and Development Direction - The company aims to reach 20,000 stores by 2026, with plans to open 1,600 to 1,800 net new stores in 2025 [40] - Focus on operational efficiency and innovation, with initiatives like Project Fresh Eye and Red Eye enhancing business capabilities [46][48] - The company is committed to maintaining healthy restaurant margins for KFC and improving Pizza Hut's margins in the mid to long run [41][100] Management's Comments on Operating Environment and Future Outlook - Management noted a dynamic external environment but expressed confidence in maintaining positive same-store transaction growth [42][43] - The company anticipates wage inflation in 2025 but aims to offset this through operational efficiency [40][102] - Management highlighted the importance of innovation and operational efficiency in driving long-term sustainable growth [53][54] Other Important Information - The company plans to return $4.5 billion to shareholders from 2024 through 2026, with a 50% increase in quarterly dividends [36][38] - The company generated $714 million in free cash flow in 2024 and ended the year with $2.8 billion in net cash [37] Q&A Session Summary Question: Insights on the competitive landscape and market share opportunities - Management observed rationalization in marketing promotions and modest price increases, indicating a healthier competitive landscape [60][61] - There are still significant opportunities for market share expansion, particularly in lower-tier cities [67] Question: Implications of new store expansion strategy - The company is aggressively pursuing new store openings in both top-tier and lower-tier cities, with a focus on achieving a two-year payback period [75][76] - Franchise stores are being accelerated to capture incremental opportunities in strategic locations [80] Question: Timing for same-store sales and margin improvements - Management indicated that the same-store sales growth strategy is working, with a focus on maintaining stable ticket averages while driving traffic [92] Question: Future margin improvement trends - The company expects core OP margin to remain stable or slightly improve year over year, with ongoing efforts to optimize costs [99][132] Question: Store economics of the Pizza Hut Wow model - The Pizza Hut Wow model is still maturing, with early signs of significant outperformance in dine-in sales, but margins are still being optimized [115][116] Question: Labor cost dynamics and delivery sales - While delivery sales are increasing, the company is implementing efficiency measures to manage labor costs effectively [130][131] Question: Pricing strategy and its impact on same-store sales - Management plans to continue driving down the ticket average for Pizza Hut while maintaining margin neutrality through innovation [140][141]

Core Insights - Yum China Holdings reported $2.6 billion in revenue for Q4 2024, a year-over-year increase of 4.1% and an EPS of $0.30 compared to $0.25 a year ago, with a slight revenue miss against the Zacks Consensus Estimate of $2.64 billion [1] - The company delivered an EPS surprise of +3.45%, exceeding the consensus EPS estimate of $0.29 [1] Financial Performance Metrics - Total number of restaurants reached 16,395, surpassing the average estimate of 16,354 [4] - Company sales revenue was $2.43 billion, below the average estimate of $2.47 billion, reflecting a year-over-year change of +3.9% [4] - Revenues from transactions with franchisees amounted to $101 million, slightly below the average estimate of $103.57 million, with a year-over-year increase of +12.2% [4] - Franchise fees and income were reported at $22 million, compared to the average estimate of $23.47 million, showing a year-over-year change of +10% [4] Segment Performance - Pizza Hut generated revenues of $510 million, below the average estimate of $519.81 million, with a year-over-year change of +2.8% [4] - KFC reported revenues of $1.95 billion, compared to the average estimate of $1.98 billion, reflecting a year-over-year increase of +4.4% [4] - Other revenues from Pizza Hut were $7 million, exceeding the average estimate of $5.99 million, but showing a year-over-year decline of -12.5% [4] Stock Performance - Yum China's shares returned +4.5% over the past month, outperforming the Zacks S&P 500 composite's +2.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Earnings Performance - Yum China Holdings reported quarterly earnings of $0.30 per share, exceeding the Zacks Consensus Estimate of $0.29 per share, and up from $0.25 per share a year ago, representing an earnings surprise of 3.45% [1] - Over the last four quarters, the company has surpassed consensus EPS estimates four times [2] - The company posted revenues of $2.6 billion for the quarter ended December 2024, missing the Zacks Consensus Estimate by 1.64%, compared to year-ago revenues of $2.49 billion [2] Stock Performance and Outlook - Yum China shares have declined approximately 5.5% since the beginning of the year, while the S&P 500 has gained 3.1% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] Estimate Revisions and Industry Context - The estimate revisions trend for Yum China is currently mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] - The current consensus EPS estimate for the upcoming quarter is $0.79 on revenues of $3.11 billion, and $2.55 on revenues of $12.13 billion for the current fiscal year [7] - The Retail - Restaurants industry, to which Yum China belongs, is currently in the top 21% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Performance - Fourth quarter operating profit grew 36% YoY to $151 million, with an operating profit margin of 5.8%, an increase of 140 basis points YoY[5][7] - Total revenues for the fourth quarter increased 4% YoY to $2.6 billion, a record high for the quarter[5][6] - For the full year, operating profit rose 5% YoY to $1.2 billion, with a core operating profit increase of 12% YoY[5][6] - Net income for Yum China Holdings, Inc. was $115 million for the quarter, up 18% from $97 million in the same quarter last year[31] - Net income for the year ended December 31, 2024, was $980 million, up from $901 million in 2023, representing an increase of 9%[41] - Total revenues for the year ended December 31, 2024, were $11,303 million, a 2.9% increase from $10,978 million in 2023[56] - Operating profit for 2024 was $1,162 million, a slight decrease from $1,106 million in 2023, reflecting a decline of 5.1%[64] Sales and Revenue Growth - Same-store sales reached 99% of the prior year's level, marking the eighth consecutive quarter of same-store transaction growth[5][6] - Digital sales reached $9.6 billion, accounting for approximately 90% of total company sales[5][6] - Company sales for Q4 2024 reached $2,434 million, an increase from $2,343 million in Q4 2023, representing a growth of 3.9%[61] - Company sales for the year ended 12/31/2024 reached $10,651 million, an increase from $10,391 million in 2023, representing a growth of 2.5%[63] Store Expansion and Operations - The company opened 534 net new stores in the fourth quarter, bringing the total store count to 16,395 as of December 31, 2024[5][6] - The company plans to open approximately 1,600 to 1,800 net new stores and allocate capital expenditures of $700 million to $800 million for the 2025 fiscal year[21] - Yum China operates over 16,000 restaurants across more than 2,200 cities in China, making it the largest restaurant company in the country[27] Franchise and Membership - Total membership for KFC and Pizza Hut exceeded 525 million, up 11% YoY, with member sales accounting for approximately 65% of system sales[5][6] - Franchise fees and income for the quarter increased by 8% to $22 million compared to $20 million in the same quarter last year[31] - Revenues from transactions with franchisees rose by 14% to $101 million for the quarter, up from $90 million in the previous year[31] - Franchise fees and income increased by 10% to $2 million in the quarter compared to $1 million in the same quarter last year[37] - Franchise fees and income for 2024 totaled $94 million, up from $89 million in 2023, marking a growth of 5.6%[64] Profitability and Margins - The operating profit margin was 2.6%, reflecting an increase of 160 basis points YoY[21] - The restaurant margin for KFC in 2024 was 16.9%, while Pizza Hut reported a margin of 12.0%, leading to an overall restaurant margin of 15.7%[63] - The company achieved a restaurant margin of 12.0%, with an expansion of 60 basis points YoY due to operational efficiency and favorable commodity prices[21] Shareholder Returns - The company plans to return a total of $4.5 billion to shareholders between 2024 and 2026, including a 50% increase in cash dividends[10][12] - Yum China aims to return $3 billion to shareholders from 2025 through 2026, in addition to the $1.5 billion returned in 2024[21] - The company repurchased $1,249 million worth of common stock during the year, compared to $613 million in the previous year[41] Tax and Expenses - The effective tax rate for the quarter was 27.6%, an increase of 3.4 percentage points from 24.2% in the previous year[31] - Total costs and expenses for the quarter were $2,444 million, a 3% increase from $2,383 million in the prior year[31] - General and administrative expenses for 2024 were $568 million, a decrease from $638 million in 2023, reflecting a reduction of 10.9%[64] - The total costs and expenses for 2024 were $10,141 million, up from $9,872 million in 2023, representing an increase of 2.7%[64] Operational Highlights - KFC's system sales grew 5% YoY, with delivery sales contributing approximately 42% of KFC's company sales[16] - Pizza Hut's operating profit increased 156% YoY in the fourth quarter, reaching $14 million[15] - Pizza Hut's system sales grew 3% YoY, with same-store sales reaching 98% of the prior year's level, an improvement from 94% in Q3[21] - Delivery sales for Pizza Hut increased by 6% YoY, contributing approximately 42% of the company's total sales[21] - The company reported a restaurant profit of $301 million for Q4 2024, compared to $253 million in Q4 2023, which is an increase of 19%[62]

Fourth Quarter Operating Profit Grew 36% and OP Margin1 Expanded 140 Basis PointsSequential Improvement in Same-Store Sales Index and Eighth Consecutive Quarter of Same-Store Transaction GrowthFull Year Operating Profit Rose 5% to $1.2 Billion, Core Operating Profit2 Up 12% and Diluted EPS Up 18%Record 2024 Results: Total Revenues of $11 Billion, 1,751 Net New Stores and $1.5 Billion Capital Returned to Shareholders SHANGHAI, Feb. 6, 2025 /PRNewswire/ -- Yum China Holdings, Inc. (the "Company" or "Yum China ...

Core Viewpoint - Yum China Holdings (YUMC) is expected to report quarterly earnings of $0.30 per share, reflecting a year-over-year increase of 20%, with anticipated revenues of $2.67 billion, a 7% increase compared to the previous year [1]. Earnings Estimates - The consensus EPS estimate has been revised 3.5% lower over the last 30 days, indicating a reevaluation by analysts [2]. - Revisions to earnings estimates are crucial for predicting investor actions, as empirical research shows a strong correlation between these trends and short-term stock performance [3]. Revenue Projections - Analysts estimate 'Revenues- Other revenues' to reach $39.76 million, a year-over-year change of -0.6% [5]. - 'Revenues- Company sales' are projected at $2.49 billion, indicating a +6.1% change from the prior-year quarter [5]. - 'Revenues- Revenues from transactions with franchisees' are expected to be $104.22 million, reflecting a +15.8% change from the year-ago quarter [5]. - 'Revenues- Franchise fees and income' are forecasted to reach $24.57 million, a +22.9% year-over-year change [6]. - 'Revenues- Pizza Hut' are expected to be $525.27 million, indicating a +5.9% change from the prior-year quarter [6]. Same-store Sales Estimates - The consensus estimate for 'Same-store sales, excluding F/X - KFC' is -0.3%, down from 3% in the same quarter last year [7]. - 'Same-store sales, excluding F/X - Pizza Hut' are projected at -1.8%, compared to 6% in the previous year [7]. - The overall estimate for 'Same-store sales, excluding F/X - Total' is -0.6%, down from 4% year-over-year [7]. Restaurant Count Projections - Analysts forecast 'No of Restaurants - Pizza Hut' to reach 3,724, up from 3,312 in the previous year [8]. - 'No of Restaurants - Others' is estimated at 990, down from 1,036 year-over-year [8]. - 'No of Restaurants - KFC' is projected to be 11,645, compared to 10,296 in the same quarter last year [8]. Market Performance - Over the past month, Yum China shares have recorded returns of +0.1%, while the Zacks S&P 500 composite has changed by +1% [8]. - Based on its Zacks Rank 3 (Hold), Yum China is expected to perform in line with the overall market in the upcoming period [9].

Yum China Holdings, Inc. (YUMC) is scheduled to report fourth-quarter 2024 results on Feb. 6, before the opening bell.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.In the last reported quarter, the company’s adjusted earnings topped the Zacks Consensus Estimate by 13.2% and rose 17% year over year. Total revenues marginally missed the consensus mark by 0.3% but grew 5.4% from the year-ago quarter.YUMC’s earnings surpassed expectations in each of the trailing four quarters, the avera ...