肯德基门店模型相对稳定，必胜客及总部降本提效成果显著肯德基/必胜客分别实现餐厅层面利润率16.2%/13.2%，其中必胜客同比提升近1pcts。毛利率部分，肯德基/必胜客食品及包装物占餐厅收入分别为31.6%/31.5% ，均同比约提升1pcts，考虑到24Q2 以鸡肉为代表的原材料成本同比大幅优化，我们预计该项提升更多源于折扣促销力度的加大。薪金与雇员福利占餐厅收入比重部分，肯德基同比相对稳定，必胜客同比优化1.4pcts，我们预计主要源于一线员工底薪调整的错期。物业租金及其他占餐厅收入比重部分，肯德基同比相对稳定，必胜客同比优化近1pcts，我们预计主要源于简化门店运营流程，预计可持续受益。与此同时，整体管理费用占总收入比重部分，同比优化1.2pcts，我们预计主要源于公司总部降本提效成果显著，预计可持续受益。Key points of investment
24Q2 achieved net profit of 0.212 billion dollars, higher than expected performance. 24Q2 achieved operating income of 2.679 billion US dollars (yoy +1%), achieved operating profit of 0.266 billion US dollars (yoy +4%), achieved net profit of 0.212 billion US dollars (yoy +8%), and profit exceeded expectations. Revenue growth is mainly due to:
The growth rate of new stores was relatively rapid, and the total number of stores increased 13% year over year in 24Q2. The profit increase is mainly due to significant cost reduction and efficiency improvements. Pizza Hut restaurant's profit margin increased by nearly 1 pcts year on year, and the overall management expenses ratio improved by about 1 pcts year on year. In terms of shareholder feedback, the annual shareholder return promise of 1.5 billion US dollars was maintained. 24H1 completed nearly 1 billion US dollars, and 24H2 still left 0.5 billion US dollars.
The KFC store model is relatively stable. Pizza Hut and the headquarters achieved remarkable results in cost reduction and efficiency improvement. KF/Pizza Hut achieved restaurant-level profit margins of 16.2%/13.2% respectively. Among them, Pizza Hut increased by nearly 1 pcts year over year. In terms of gross margin, KFC/Pizza Hut food and packaging accounted for 31.6%/31.5% of restaurant revenue, respectively, an increase of about 1 pcts year over year. Considering the significant year-on-year optimization of raw material costs represented by chicken in 24Q2, we expect this increase to be due to increased discount promotions. Salaries and employee benefits account for a share of restaurant revenue. KFC is relatively stable year over year, and Pizza Hut optimized 1.4 pcts year over year. We expect this is mainly due to a mistake in adjusting the base salary of frontline employees. Property rents and others account for a share of restaurant revenue. KFC is relatively stable year over year, and Pizza Hut optimizes nearly 1 pcts year over year. We expect to see sustainable benefits mainly due to simplified store operation processes. At the same time, overall management expenses account for a share of total revenue, with a year-on-year optimization of 1.2 pcts. We expect that this is mainly due to significant cost reduction and efficiency improvement results at the company headquarters, and we expect sustainable benefits.
The trend of store expansion continues, and new store types such as Kenyue Coffee/Pizza Hut are expected to contribute to the opening dimension. The number of KFC/Pizza Hut stores increased 14%/14% year over year in 24Q2. The trend of store expansion continues, and the company still maintains the goal of opening 1,500 to 1,700 new stores during the year. At the same store level, the growth rate of KFC and Pizza Hut in the same store was -3%/-8% respectively in 24Q2. Among them, the customer unit price changed by -7%/-9%, respectively, and customer unit prices continued to be under pressure. We expect the trend of cost performance reform to continue. On an innovative level, Kenyue Coffee's 24H1 sales exceeded 1 billion yuan, +26%; sales were nearly 0.12 billion cups, +36% year over year; Pizza Hut WOW was positioned as a one-person food and price-sensitive customer, and has opened 100+ stores since May; franchisees account for about 25% of the newly opened 24Q2 stores, and franchisees are expected to continue to contribute to growth.
Profit forecasting and valuation
Yum China is a leading Western-style fast food company in China, building barriers with brand power, product power, digitalization, and supply chain. We expect Yum China's overall revenue in 2024-2026 to reach 11332/12316/13251 million US dollars, respectively, +3%/+9%/+8%; net profit to mother will reach 852/940/1019 million US dollars, +3% /+10%/+8% year over year, corresponding PE is 15x/14x/13x, respectively. Combined with impressive shareholder feedback, leading industry premiums have maintained a “buy” rating.
Risk warning: macroeconomic stagnation, food safety, falling short of expectations for store expansion, etc.