The epidemic disturbed the operation under obvious pressure, and the adjusted performance of 2022Q1 fell by 56%. 2022Q1, the company achieved operating income of US $2.668 billion / + 4.3%, driven by new restaurants and merged tables in Hangzhou KFC, which was partly offset by the closure of business affected by the epidemic; operating profit of US $191 million /-44.2%; return performance of US $100 million /-56.5% After adjusting the net profit of US $102 million /-56.2%, the profit end is under pressure, and the core is that stores are suspended under the epidemic repeatedly / only takeout results in same-store sales pressure. Specifically, stores that are temporarily closed or only provide takeout and takeout: an average of about 300 in January and February, with a peak of more than 500 in January, compared with an average of more than 1700 in March, 40% of which are temporarily closed.
On the operating data side, the sales revenue of 2022Q1 system is-4% year-on-year, of which KFC/PZH is-4%; same-store sales are-8% year-on-year (excluding data during the restaurant closure period); KFC/PZH by brand is-9% and 5% respectively. Month by month, January-February year-on-year-4% March-month-on-year-20%; as of 2022Q1, member sales accounted for 62%/-2pct, due to the impact of increased consumer base; digital orders accounted for 88%/+2pct, takeout sales accounted for 36%/+5pct. In terms of store expansion, the company added 522 new stores, with a net increase of 329 KFC/PZH (273 plus 89 KFC/PZH), bringing the total to 12117.
The proportion of all costs has risen, and the profit margins of restaurants are under pressure. 2022Q1, the proportion of food and packaging is 31.1% Universe 0.9pct; the proportion of employees' salary is 26.2% Universe 2.8pct; the proportion of property rental expenses is 29.0%/+1.2pct. In terms of restaurant profit margin, the overall restaurant profit margin of 2022Q1 is 13.8%, which is 15.2%, 10.7%, respectively, compared with the same period of 4.7pct/-4.6pct.
It is expected that the operating pressure of 2022Q2 will remain high, but the target of net increase of 1000-1200 units for the whole year will be maintained, and the Tucker Bell brand will revise its long-term plan. The company made an operating loss in March, and the epidemic situation in April is even more serious. We judge that the operating prospect of 2022Q2 continues to be under pressure. However, the profitability and payback period of the company's core brands remain robust, so the target for 2022 has not been lowered (a net increase of 1000-1200 stores and capital expenditure of $8-1 billion).
At the same time, the company and Yum! Brands rescheduled Tucker Bell's development plan to have at least 100 stores by 2022 and at least 225 by 2025. The continuous development of new tracks such as Lavazza& Tucker Bell shows the company's determination to actively explore a new growth curve.
Risk tips: recurrent epidemic, slow sinking and expansion, lower-than-expected incubation of new products, food safety risks and other investment suggestions: short-term operating pressure does not change the competitiveness of the core brand, maintain the "increase" rating taking into account the current domestic epidemic situation (about 3000 stores closed in April / takeout only), and the estimated income from 2022-2024 is $99,181,813 billion (originally estimated at 1.238.8 billion). Year-on-year growth rate of 0.4%, 19.2%, 9.8%. The EPS is US $1.35, 0.999, and 2.28 (originally 1.69, 2.04, and 2.21), with a year-on-year growth rate of-42.6%, 47.9, 14.2%, and the corresponding PE is 29, 20, and 17x. In the short term, the operating pressure of the company still exists under the epidemic, but the core brand competitiveness is still there, the sinking market continues to advance, and the company actively incubates new brands for long-term development and maintains the company's "overweight" rating.