研究报告全文：MN15Sep2023CMBInternationalGlobalMarketsEquityResearchCompanyUpdateYumChinaYUMCUSKeytakeawaysfromYUMC2023InvestorDayDuringthe2023YUMCInvestorDayinXianlasttimewasinShanghaiin2019TargetPriceUS7866itsmanagementraisedtheFY23Etargetandgaveatimeframeforitsmid-termPreviousTPUS7447targetof20000storesinChinabyFY26EWebelievesuchaccelerationinUpDownside403growthduringFY24E-26EisbasedonYUMCsyearsofrefinementinunitCurrentPriceUS5608economicsandaconfidentanswertothespeedingupinindustryconsolidationHencewemaintainBUYandliftTPtoUS7866basedon27xFY24EPEChinaConsumerDiscretionaryunchangedWalterWOORevisedupandprovidedmoredetailsaboutitsFY23Etarget85237618776Managementisnowtargetinga90SSSrecoveryratevs2019whichiswalterwoocmbicomhkactuallyimplying5-10SSSGinFY23EandthatisroughlyinlinewithCMBIestTheyalsorevisedupstoreopeningtargetto1400-1600fromRaphaelTSE1100-1300liftingtheYoYstorecountgrowthto12from1085239000856Howeverthisisjustinlinewithourviewwedidmentiontwicein1Q23andraphaeltsecmbicomhk1H23thattheoriginalplanwastooconservativewherethegrowthratewasevenslowerthaninFY22and1H23mixwasjusttoohighat50-60StockDataWeestimatedthatthemixforKFCPizzaHutwillbeabout1000-1100MktCapUSmn234975Avg3mthstoUSmn502400-500WhiletheCompanyiskeepingitscapextargetofUS700mn-52wHighLowUS64363884900mnthespendingperstorecanbelowerandresultedinlowerDATotalIssuedSharesmn4190expensesandhigherOPmarginSourceFactSetPuttingdownatimeframeforits20000storestargetManagementShareholdingStructurefinallyprovidedaconcretetimelineforitsmid-termtargetof20000storesJPMorganChaseCo105inChinathatisbyFY26Ewhichiseffectivelyimplyingroughly1800InvescoAdvisersInc80storesperyearperhaps1200600forKFCPizzaHutandaround12SourceHKExCAGRWearereasonablyconfidentonthisgoalbecause1KFCPizzaSharePerformanceHuthadonlytappedinto1900650citiesstillfarbelowthe3000AbsoluteRelativeaddressablecitiesthatYUMCthinksaresuitable2theaddressablemarket1-mth3031isnowlargersincesmallerstoremodelwasinventedwherethecapexand3-mth-52-65breakevenpointarefarlower3thefranchisingmixwasraisedto15-6-mth-72-15320ofnewstoresandmorelocalresourcescanbeleveragedSourceFactSetFranchisinghasbeenmodernizedandbecomesmoreusefulfor12-mthPricePerformanceexpansionManagementdidmentionthatthenetworkeffectisstrongerinurbancitiesbutnotinruralcitiesandthereforehavingacapablepartnercancertainlybeusefulwhenexpandingtotheremoteareasMoreoverlocalpartnerscanoftenpenetrateintovarioussitessuchasthehospitalsuniversitiestransportationhubsetcMoreimportantlythankstoadvancementofdigitalizationandmanagementknow-howthefranchisedstoresnowadaysaremucheasiertobemanagedandmonitoredthereforethefoodsafetyissuesshouldbesolvedwitheaseSourceFactSetMaintainBUYandraiseTPtoUS7866OurnewTPisbasedon27xRecentreportsFY24EPEunchangedatparwith5yearsavgandsupportedbyindustryHaidilao6862HKStoreexpansionturnaroundandtheacceleratedstoreexpansionsWerevisedupFY23Emaybethenextcatalyst24E25ENPby167tofactorinfasterexpansionandhigherOP1Sep23marginYUMCiscurrentlytradingat19xFY24EPEnotatalldemandingNayukiHoldingsLimited2150HKEarningsSummaryGuidancerevisedandfranchisingistheYE31DecFY21AFY22AFY23EFY24EFY25Ekey1Sep23RevenueUSmn98539569112621297915085YoYgrowth19229177152162Jiumaojiu9922HKTaiErsOPMandOperatingprofitUSmn1386629131516512142Songarethekeydrivers25Aug23NetprofitUSmn9900442090861232415904EPSReportedUS228104220291376YumChina9987HKLikelytobeYoYgrowth1705421108323290resilientandoutperformin2H23E2Aug23PEx246536254192149PBx3131302623Yield0811121620ROE13859120146165SourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1MOREREPORTSFROMBLOOMBERGRESPCMBRGOORhttpwwwcmbicomhk15Sep2023ManagementalsolaiddowntheFY24E-26EoutlookTheyarenowtargetingHSD-DDsystemsalesCAGRHSD-DDoperatingprofitCAGRandDDEPSCAGRduringFY24E-26ESinceFY26targetof20000storeshadalreadyimplieda12storecountCAGRthereforeevenifwetakeintoaccountofthepotentiallylowersalesforsmallersatellitestoremodelvstheregularonesbyabout25thesegrowthtargetsareallquiteachievableCompetitiondidintensifybutYUMCisstillhighlycompetitiveItistotallytruethatthemarkethasbecomemorepromotionalespwhentheeconomicgrowthandrecoverytrendwasnotasgoodasexpectedandnewplayershavebeenexpandinginanextremelyrapidspeedinFY23EHoweverwestillthinkYUMChasallitstakestocompeteandwinmoremarketsharesupportedbyits1acceleratedstoreopeningplan2deliciousandinnovativefoodnewproductslikeChinesestyleburgerwillbeintroducedin4Q23E3widenedpricerangeasithaslaunchedmoreaffordableproductsliketheRMB20combomealtheGPmarginisstillhighthankstovalueengineeringStoreeconomichasbecomewaymoreprofitablevs2019andimprovementsmaycontinueGivenmorecollaborationandinnovationinthesupplychainunitcostformanyproductsegatypicalchickenproductvs2019hasgonedownalotsinceFY20thishadgivenYUMCalargebuffertofacepotentialcostinflationaswellaspricewarThankstoimprovedlabourcapabilitythroughmoreinvestmentsintechnologyandprocessdesignincludingsharingofmangersbetweenstoresandcentralizedrecruitmentandstafftrainingfunctionsaswellasthegreateruseofsmallersizestoremodelDAandrentalexpensesarelowerwebelievetherestaurantlevelOPmargincancontinuetoimproveNotedthatrestaurantlevelOPmarginforsmallerstoreforKFCsatellitestoreforPizzaHuthavealreadyincreasedto2116vs1913forregularstoreEarningsrevisionFigure1EarningsrevisionNewOldDiffUSmnFY23EFY24EFY25EFY23EFY24EFY25EFY23EFY24EFY25ERevenue112621297915085112171257614120043268Grossprofit79599203107057927892010025043268OperatingProfit1315165121421301155219231164114Netprofit9091232159089911671448115698EPSUScents220329133760217927583423115698Grossmargin7077097107077097100ppt0ppt0pptEBITmargin11712714211612313601ppt04ppt06pptNetprofitattmargin8195105809310301ppt02ppt03pptSourceCompanydataCMBIGMestimatesFigure2CMBIGMestimatesvsconsensusCMBIGMConsensusDiffUSmnFY23EFY24EFY25EFY23EFY24EFY25EFY23EFY24EFY25ERevenue112621297915085112421271314042022174Grossprofit79599203107057370868391758060167OperatingProfit1315165121421252152017315086237Netprofit9091232159090910961263-01124259EPSUScents22032913376021692639307315104223GrossMargin70770971065668365351ppt26ppt56pptOperatingMargin11712714211112012305ppt08ppt19pptNetMargin81951058186900ppt09ppt15pptSourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE215Sep2023AssumptionsFigure3CMBIGMsassumptionsMajorassumptionsFY21AFY22AFY23EFY24EFY25ESalesbysegmentUSmnKFC-dineinsales48184457519758756788KFC-deliverysales21852762335439384545PH-dineinsales13401125133016062007PH-deliverysales76983597711431315Others741390404416430Total98539569112621297915085SalesbysegmentgrowthKFC-dineinsales160-75166131155KFC-deliverysales347264214174154PH-dineinsales170-161183208249PH-deliverysales19886170170150Others57-474373033Total192-29177152162SalesnetworkbybrandKFC81689094101341137412614PizzaHut25902903332339634603Others103095099010401120Total1178812947144471637718337RestaurantprofitmarginbybrandKFC145155190197213Pizzahut10691138151161Others-13-46-020405Total137141180188202CostsbreakdownFoodandpapersales285296293291290Payrollandemployeebenefitssales229250242238231Rentalandotheroperatingexpensessales270272251253251GAexpensessales5762605856Franchiseesexpensessales6629252218Effectivetaxrate265304300250250NPattmargin100468195105NPattgrowth263-5541056356290SourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE315Sep2023ValuationFigure4Peersvaluationtable3yrs12mUpPBROEYieldYTDPriceMktCapYearPExPEGTPDown-xperfxCompanyTickerRatingLCLCsideHKmnEndFY1EFY2EFY2EFY2EFY1EFY1EFY1ELeadingGreaterChinaCateringYumChinaYUMCUSBUY7866560840180139Dec-222541922659051211Jiumaojiu9922HKBUY154611903017309Dec-2229718236660208429Haidilao6862HKBUY2476209018116497Dec-2224621170460041167Nayuki2150HKBUY753460647890Dec-2230114112970100389Helens9869HKNRna718na9096Dec-22245177336810115516TamJai2217HKNRna158na2119Mar-231449913910621399CafeDeCoral341HKBUY1232915355359Mar-2317212618390256386Xiabuxiabu520HKNR489344423736Dec-2228811821470116610Yihai1579HKBUYna1396na14472Dec-22149131232051319489GourmetMaster2723TTNRna11200na4947Dec-2218714916760437261Avg22815327170320356Med24614522620316394InternationalCateringYumBrandsYUMUSNRna12907na283147Dec-22246218nana191908McdonaldsMCDUSNRna28177na1607615Dec-22244227nana142269StarbucksCorpSBUXUSNRna9693na869193Oct-22281238nana152223RestBrandsQSRUSNRna6759na241413Dec-2221019667402373345ChipotleCMGUSNRna19330na417499Dec-224453671514531800393DardenDRIUSNRna14881na140820May-2317015472446183576DominosPizzaDPZUSNRna39646na108927Jan-23290252nana2512145WendysCoWENUSNRna1994na32672Jan-232031781694701450119ShakeShackSHAKUSNRna6124na20279Dec-2222601497581811na475WingstopIncWINGUSNRna16876na39607Dec-22774666nana4005226JollibeeFoodsJFCPMNRna23240na35929Dec-223262683193211310Avg495387913081921119Med28123870424182069H-sharesConsumerStaplesUPC220HKNRna545na23540Dec-22135121161180877302Tingyi322HKNRna1074na60513Dec-22161133402170963204WantWant151HKNRna500na59397Mar-2313712631216145542ChinaMengniu2319HKBUY3650272534107364Dec-22168145201131518219NongfuSpring9633HKBUY5690445028500468Dec-22451389143456321609Vitasoy345HKNRna988na10599Mar-2358128531150511385Budweiser1876HKBUY1860168810223549Dec-2227322724831716312Tsingtao168HKBUY8890644538110944Dec-22186158261671429158CRBeer291HKBUY7310443065143717Dec-22249205381791416188DaliFoods3799HKNRna373na51079Dec-2214813521158343966Avg249192391721634173Med177151291631423196SourceBloombergCompanydataCMBIGMestimatescoveredbyJosephWongPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE415Sep2023Figure5Forward12MPEvaluationbandSourceBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE515Sep2023FinancialSummaryINCOMESTATEMENT2020A2021A2022A2023E2024E2025EYE31DecUSmnRevenue826398539569112621297915085Costofgoodssold234228122836330337764381Grossprofit5921704167337959920310705Operatingexpenses524562986010666675918608Sellingexpense000000Adminexpense5916637048008961011Staffcosts173022582389272030853483Otherrentalrelatedexpenses814968957107912251402Others166018931358149317331944Operatingprofit9611386629131516512142Otherincome28564394233945ShareoflossesprofitsofassociatesJV000000EBITDA141119021231188923032911Depreciation431505582514595729Otheramortisation191120605740Interestincome436084113145171Interestexpense000000NetInterestincomeexpense436084113145171Otherincomeexpense1045426313541Pre-taxprofit11081392687139817612272Incometax295369209419440568Aftertaxprofit813102347897913201704Minorityinterest2933367088114Netprofit78499044290912321590BALANCESHEET2020A2021A2022A2023E2024E2025EYE31DecUSmnCurrentassets493647163940532963227373Cashequivalents115811361130237432304108Restrictedcash310528602022202220222022Accountreceivables9967647789103Inventories398432417494565656Prepayment176221307361416484Othercurrentassets000000Non-currentassets593985077886751178088398PPE176522512118233629093537Right-of-useassets216426122219221922192219InvestmentinJVsassos85292266266266266Intangibles24627215999422Goodwill83221421988145512371237Othernon-currentassets8479381136113611361136Totalassets108751322311826128401413015770Currentliabilities206723832166240326432945Short-termborrowings000000Accountpayables70883083096711051282Taxpayable725168686868Othercurrentliabilities128715021268136914701595Non-currentliabilities233729182500250025002500Long-termborrowings000000Othernon-currentliabilities233729182500250025002500Totalliabilities440453014666490351435445Sharecapital482949674291429142914291Retainedearnings210528922191262834944612Otherreserves46363678101812021422Totalshareholdersequity6471792271607937898710325Minorityinterest000000Totalequityandliabilities108751322311826128401413015770PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE615Sep2023CASHFLOW2020A2021A2022A2023E2024E2025EYE31DecUSmnOperatingProfitbeforetaxation11081392687139817612272Depreciationamortization450516602574652769Taxpaid11116020419440568Changeinworkingcapital6953092103130Others6249901445332180Netcashfromoperations111411311413217822932602InvestingCapitalexpenditure41968967973211681358Acquisitionofsubsidiariesinvestments28811523000Others240251180000Netcashfrominvesting310985552273211681358FinancingDividendpaid95203202202270366Netborrowings000000Proceedsfromshareissues219500000Sharerepurchases875466000Others3435176000Netcashfromfinancing2058313844202270366NetchangeincashCashatthebeginningoftheyear104611581136113023743230Exchangedifference401553000Others7237471244855878Cashattheendoftheyear115811361130237432304108GROWTH2020A2021A2022A2023E2024E2025EYE31DecRevenue5819229177152162Grossprofit6018944182156163Operatingprofit674425461091255297EBITDA62348353535219264Netprofit1002635541056356290PROFITABILITY2020A2021A2022A2023E2024E2025EYE31DecGrossprofitmargin717715704707709710Operatingmargin11614166117127142EBITDAmargin171193129168177193ReturnonequityROE16313859120146165GEARINGLIQUIDITYACTIVITIES2020A2021A2022A2023E2024E2025EYE31DecCurrentratiox242018222425Receivableturnoverdays413125252525Inventoryturnoverdays606539546546546546Payableturnoverdays10379981068106810681068VALUATION2020A2021A2022A2023E2024E2025EYE31DecPE287246536254192149PEdiluted287246536254192149PB353131302623PCFPS18122914110610391Divyield050811121620SourceCompanydataCMBIGMestimatesNoteThecalculationofnetcashincludesfinancialassetsPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE715Sep2023DisclosuresDisclaimersAnalystCertificationTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportinwholeorinpartcertifiesthatwithrespecttothesecuritiesorissuerthattheanalystcoveredinthisreport1alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthesubjectsecuritiesorissuerand2nopartofhisorhercompensationwasisorwillbedirectlyorindirectlyrelatedtothespecificviewsexpressedbythatanalystinthisreportBesidestheanalystconfirmsthatneithertheanalystnorhisherassociatesasdefinedinthecodeofconductissuedbyTheHongKongSecuritiesandFuturesCommission1havedealtinortradedinthestockscoveredinthisresearchreportwithin30calendardayspriortothedateofissueofthisreport2willdealinortradeinthestockscoveredinthisresearchreport3businessdaysafterthedateofissueofthisreport3serveasanofficerofanyoftheHongKonglistedcompaniescoveredinthisreportand4haveanyfinancialinterestsintheHongKonglistedcompaniescoveredinthisreportCMBIGMoritsaffiliateshaveinvestmentbankingrelationshipwiththeissuerscoveredinthisreportinpreceding12monthsCMBIGMRatingsBUYStockwithpotentialreturnofover15overnext12monthsHOLDStockwithpotentialreturnof15to-10overnext12monthsSELLStockwithpotentiallossofover10overnext12monthsNOTRATEDStockisnotratedbyCMBIGMOUTPERFORMIndustryexpectedtooutperformtherelevantbroadmarketbenchmarkovernext12monthsMARKET-PERFORMIndustryexpectedtoperformin-linewiththerelevantbroadmarketbenchmarkovernext12monthsUNDERPERFORMIndustryexpectedtounderperformtherelevantbroadmarketbenchmarkovernext12monthsCMBInternationalGlobalMarketsLimitedAddress45FChampionTower3GardenRoadHongKongTel85239000888Fax85239000800CMBInternationalGlobalMarketsLimitedCMBIGMisawhollyownedsubsidiaryofCMBInternationalCapitalCorporationLimitedawhollyownedsubsidiaryofChinaMerchantsBankImportantDisclosuresTherearerisksinvolvedintransactinginanysecuritiesTheinformationcontainedinthisreportmaynotbesuitableforthepurposesofallinvestorsCMBIGMdoesnotprovideindividuallytailoredinvestmentadviceThisreporthasbeenpreparedwithoutregardtotheindividualinvestmentobjectivesfinancialpositionorspecialrequirementsPastperformancehasnoindicationoffutureperformanceandactualeventsmaydiffermateriallyfromthatwhichiscontainedinthereportThevalueofandreturnsfromanyinvestmentsareuncertainandarenotguaranteedandmayfluctuateasaresultoftheirdependenceontheperformanceofunderlyingassetsorothervariablemarketfactorsCMBIGMrecommendsthatinvestorsshouldindependentlyevaluateparticularinvestmentsandstrategiesandencouragesinvestorstoconsultwithaprofessionalfinancialadvisorinordertomaketheirowninvestmentdecisionsThisreportoranyinformationcontainedhereinhavebeenpreparedbytheCMBIGMsolelyforthepurposeofsupplyinginformationtotheclientsofCMBIGMoritsaffiliatestowhomitisdistributedThisreportisnotandshouldnotbeconstruedasanofferorsolicitationtobuyorsellanysecurityoranyinterestinsecuritiesorenterintoanytransactionNeitherCMBIGMnoranyofitsaffiliatesshareholdersagentsconsultantsdirectorsofficersoremployeesshallbeliableforanylossdamageorexpensewhatsoeverwhetherdirectorconsequentialincurredinrelyingontheinformationcontainedinthisreportAnyonemakinguseoftheinformationcontainedinthisreportdoessoentirelyattheirownriskTheinformationandcontentscontainedinthisreportarebasedontheanalysesandinterpretationsofinformationbelievedtobepubliclyavailableandreliableCMBIGMhasexertedeveryeffortinitscapacitytoensurebutnottoguaranteetheiraccuracycompletenesstimelinessorcorrectnessCMBIGMprovidestheinformationadvicesandforecastsonanASISbasisTheinformationandcontentsaresubjecttochangewithoutnoticeCMBIGMmayissueotherpublicationshavinginformationandorconclusionsdifferentfromthisreportThesepublicationsreflectdifferentassumptionpoint-of-viewandanalyticalmethodswhencompilingCMBIGMmaymakeinvestmentdecisionsortakeproprietarypositionsthatareinconsistentwiththerecommendationsorviewsinthisreportCMBIGMmayhaveapositionmakemarketsoractasprincipalorengageintransactionsinsecuritiesofcompaniesreferredtointhisreportforitselfandoronbehalfofitsclientsfromtimetotimeInvestorsshouldassumethatCMBIGMdoesorseekstohaveinvestmentbankingorotherbusinessrelationshipswiththecompaniesinthisreportAsaresultrecipientsshouldbeawarethatCMBIGMmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreportandCMBIGMwillnotassumeanyresponsibilityinrespectthereofThisreportisfortheuseofintendedrecipientsonlyandthispublicationmaynotbereproducedreprintedsoldredistributedorpublishedinwholeorinpartforanypurposewithoutpriorwrittenconsentofCMBIGMAdditionalinformationonrecommendedsecuritiesisavailableuponrequestForrecipientsofthisdocumentintheUnitedKingdomThisreporthasbeenprovidedonlytopersonsIfallingwithinArticle195oftheFinancialServicesandMarketsAct2000FinancialPromotionOrder2005asamendedfromtimetotimeTheOrderorIIarepersonsfallingwithinArticle492atodHighNetWorthCompaniesUnincorporatedAssociationsetcoftheOrderandmaynotbeprovidedtoanyotherpersonwithoutthepriorwrittenconsentofCMBIGMForrecipientsofthisdocumentintheUnitedStatesCMBIGMisnotaregisteredbroker-dealerintheUnitedStatesAsaresultCMBIGMisnotsubjecttoUSrulesregardingthepreparationofresearchreportsandtheindependenceofresearchanalystsTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportisnotregisteredorqualifiedasaresearchanalystwiththeFinancialIndustryRegulatoryAuthorityFINRATheanalystisnotsubjecttoapplicablerestrictionsunderFINRARulesintendedtoensurethattheanalystisnotaffectedbypotentialconflictsofinterestthatcouldbearuponthereliabilityoftheresearchreportThisreportisintendedfordistributionintheUnitedStatessolelytomajorUSinstitutionalinvestorsasdefinedinRule15a-6undertheUSSecuritiesExchangeActof1934asamendedandmaynotbefurnishedtoanyotherpersonintheUnitedStatesEachmajorUSinstitutionalinvestorthatreceivesacopyofthisreportbyitsacceptancehereofrepresentsandagreesthatitshallnotdistributeorprovidethisreporttoanyotherpersonAnyUSrecipientofthisreportwishingtoeffectanytransactiontobuyorsellsecuritiesbasedontheinformationprovidedinthisreportshoulddosoonlythroughaUS-registeredbroker-dealerForrecipientsofthisdocumentinSingaporeThisreportisdistributedinSingaporebyCMBISingaporePteLimitedCMBISGCompanyRegnNo201731928DanExemptFinancialAdviserasdefinedintheFinancialAdvisersActCap110ofSingaporeandregulatedbytheMonetaryAuthorityofSingaporeCMBISGmaydistributereportsproducedbyitsrespectiveforeignentitiesaffiliatesorotherforeignresearchhousespursuanttoanarrangementunderRegulation32CoftheFinancialAdvisersRegulationsWherethereportisdistributedinSingaporetoapersonwhoisnotanAccreditedInvestorExpertInvestororanInstitutionalInvestorasdefinedintheSecuritiesandFuturesActCap289ofSingaporeCMBISGacceptslegalresponsibilityforthecontentsofthereporttosuchpersonsonlytotheextentrequiredbylawSingaporerecipientsshouldcontactCMBISGat6563504400formattersarisingfromorinconnectionwiththereportPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE8