Zhitong Finance and Economics learned that Essence International issued a research report saying that it maintained Yum China (09987)'s "* rating, considering that revenue growth slightly exceeded expectations, and raised the net profit attributable to the parent company in 24 25 26 to 9 respectively2/10.3/11.$300 million, corresponding to an EPS of 177/19.8/21.HK$8 with a target price of HK$421. The bank believes that Yum China has considerable competitive advantages and brand influence in the fast food track, excellent management capabilities, and high future growth potential and high certainty.
The main views of Essence International are as follows:
Revenues hit record highs and growth recovered.
Yum China's full-year 2023 revenue was $10.9 billion +14% (+21% at constant exchange rates) and net profit attributable to the parent was 8$2.7 billion +88% (+99% at constant exchange rates). The restaurant profit margin is 163%/+2.1pct。System sales +21%, same-store sales +7%, and the number of stores by the end of '23 was 1460,000, 1,697 new in 23 years. Compared to 21 years, the annualized growth rate of revenue is 56%, adjusted operating profit grew at an annualized rate of 209%, the growth rate has recovered.
KFC hit an all-time high, and Q4 began to improve month by month.
KFC revenue in 23 years is 82$400 million +14% and operating profit of 12$0.2 billion +52% with an operating margin of 14.6%/+3.7pct。KFC's system sales increased 20% year-over-year and same-store sales were up 7%. The average order value decreased by 11% year-over-year, mainly due to the addition of lower-priced entry-level products. Fourth-quarter revenue of 18$700 million +17% with operating profit of 2$500 million +42%.
Both quarterly and annual, KFC's revenue and operating profit reached record highs. Although Q3 23 is facing certain pressure due to the weakness of the consumption environment, the business situation in Q4 has improved slightly, and there is a trend of improving month by month. By the end of the year, the number of stores reached 10,296, an increase of 13% over the same period last year. The growth rate of franchised stores is higher than that of directly operated stores, and the growth rate has been maintained at about 20% in the past two years. The company is actively increasing the number of small stores and expanding into the sinking market.
Pizza Hut turned profitable in the fourth quarter, and the speed of store opening accelerated.
Pizza Hut revenue in '23 was 22$500 million +146%, operating profit 1US$4.2 billion 103%, operating margin 63%/+2.7pct。Fourth-quarter revenue of 4$9.6 billion +228%, operating profit of $5 million. Pizza Hut's system sales increased 20 percent year-over-year and same-store sales 6 percent. By the end of the year, the number of stores reached 3,312, an increase of 14% over the same period last year, and the net opening of stores for the whole year was 409, which continued to accelerate compared with previous years. The company continues to expand into the sinking market, and the proportion of small stores is increasing.
Profit margins improved due to lower rental ratios.
The 23-year-old restaurant margin was 154%, an increase of 2pct year-on-year. The proportion of raw material costs and labor costs was basically the same as that in 22 years, and the proportion of rent and other costs decreased by 2 compared with 22 years1pct。On the one hand, it is due to lower rents and depreciation and amortization, and on the other hand, it is due to the savings in overhead due to more efficient management.
It reached 20,000 26 years ago and will return $3 billion to shareholders in the future.
The company expects to open 1,500-1,700 new stores in 24 years, and the number of stores will reach 20,000 by 2026, with an annualized compound growth rate of 11%. At present, six of the company's newly opened stores are third- and fourth-tier cities. The company also said it will return about $3 billion to shareholders over the next three years in the form of dividends and buybacks. The 24-year buyback program totaled 12$500 million, which will bring 7With a 6% return, the return is more impressive. In addition, the company raised its quarterly cash dividend to 0. per share$16, an increase of 23% from before.