Jingwu Cai Xun | Industrial Securities issued a research report stating that Yum China (09987) achieved revenue of 3.07 billion USD in Q3 2024, a year-on-year growth of 5%, with a net income attributable to shareholders of 0.3 billion USD, an increase of 22% year-on-year. The core operating profit was 0.37 billion USD, up by 18% year-on-year. Since 2024, the company has maintained an active dividend repurchase strategy, distributing a total of 0.19 billion USD in dividends and repurchasing 1.06 billion USD in the first three quarters, returning a total of 1.24 billion USD to shareholders, with a total annual budget of 1.5 billion USD. The company announced that the total dividend repurchase amount for the three years from 2024 to 2026 would be raised from 3 billion USD to 4.5 billion USD, accounting for 23% of the current market cap.

The bank stated that in 2024 Q3, KFC's same-store sales decreased by 2% year-on-year, with customer traffic increasing by 1% while average check price dropped by 3%, significantly reducing the decline in average check price. In 2024 Q3, Pizza Hut's same-store sales dropped by 6% year-on-year, with customer traffic growing by 4% and average check price declining by 9%, similar to the decline in Q2 2024. The company actively introduced new products and adjusted its product mix, showing resilience in same-store performance even with narrowing declines in average check price and positive customer traffic growth.

The bank has a bullish long-term view on the company's fundamentals, optimistic about the steady expansion of stores, strong brand power, resilient performance of core stores, active exploration of new models, and significant returns from dividends and repurchases. The bank predicts the company's revenue for 2024/2025/2026 to be 11.426 / 12.383 / 13.405 billion USD, with year-on-year growth of 4.1% / 8.4% / 8.2%; net income attributable to shareholders is expected to be 0.91 / 0.99 / 1.07 billion USD, with year-on-year growth of 10.2% / 8.5% / 8.3%; EPS is projected to be 2.36 / 2.63 / 2.92 USD. The bank maintains a "buy" rating, with the current stock price corresponding to a PE ratio of 21.7 / 19.5 / 17.5 times for 2024/2025/2026.