CITIC SEC published a research report stating that it maintains a "Buy" rating on YUM CHINA (09987). With a low base, same-store performance in Q4 2024 is expected to continue improving. Under the backdrop of a positive policy shift and rising expectations for potential economic recovery, the company's Operation expectations are likely to lead to further valuation recovery.

The report states that KFC China announced price adjustment measures on December 24, with an average increase of 2%, aiming to better adapt to changes in market costs. Historically, KFC has periodically assessed and cautiously adjusted its price structure based on changes in operating costs, with the last price adjustment occurring in early 2023. This price adjustment reflects that the mass dining sector is gradually stabilizing after experiencing price competition over the past two years.

Currently, domestic consumer spending intentions remain relatively cautious, and it is expected that the actual effective price increase in the short term may be less than the menu price increase due to discounts and product structure impacts. However, in the long run, raising menu prices has a positive effect on maintaining the upward trend of average transaction value. After a smooth transition during the price adjustment period, a higher price base will also provide the company with more flexible discount adjustment space. Pizza Hut has reduced the prices of 30 core products, but maintains differences in SKUs and overall pricing compared to WOW stores, developing in synchronization. It is believed that Pizza Hut's adjustments are likely to bring good results in "price-for-volume" effects.