Investment Rating - The report maintains a "Buy" rating for Yum China (9987 HK) with a target price of HKD 359.30 [4][5]. Core Insights - In Q2 2024, Yum China reported a net profit of USD 212 million, exceeding previous expectations, with revenue of USD 2.68 billion, a year-on-year increase of 1% [1][2]. - The core operating profit reached USD 275 million, reflecting a year-on-year growth of 12%, with a core net profit margin of 10.0%, up 0.7 percentage points year-on-year [1][2]. - The company is focusing on enhancing its digital capabilities and optimizing operational efficiency, which is expected to strengthen growth resilience [1][3]. Summary by Sections Financial Performance - Q2 2024 revenue was USD 2.68 billion, with a year-on-year increase of 1% (4% excluding foreign currency effects) [1]. - Core operating profit was USD 275 million, up 12% year-on-year, with a core net profit margin of 10.0% [2]. - The company achieved a net profit of USD 212 million, an 8% increase year-on-year, outperforming prior forecasts [1][2]. Store Expansion and Innovation - In Q2 2024, Yum China opened 401 new stores, with 99 being franchise locations, bringing the total store count to 15,423 [3]. - The company is expanding its KFC and Pizza Hut brands, with a focus on innovative store formats like KCoffee and the WOW store model for Pizza Hut [3]. - The franchise model is enhancing penetration in remote and hub areas, with KCoffee expected to reach 500-600 locations by the end of 2024 [3]. Future Earnings Projections - EPS estimates for 2024, 2025, and 2026 are projected at USD 2.19, USD 2.42, and USD 2.71 respectively [4][6]. - The target price of HKD 359.30 is based on a 21x PE ratio for 2024, reflecting the company's strong market position and resilience [4][6].
百胜中国：经营利润增长亮眼，创新店型看点多