20210205-招银国际-The_darkest_hour_is_just_before_the_dawn_7页_1mb

报告摘要

Yum China (YUMC US) Equity Research Summary

Core Content

Yum China (YUMC US) is the subject of a detailed equity research update, with the recommendation to maintain a BUY rating. The target price has been revised down to US$66.59, based on a 36x FY21E P/E multiple. The current price is US$55.98, which is +18.9% below the target price.

The company's performance in the fourth quarter of 2020 (4Q20) was strong, with net profit growing by 68% YoY to US$151mn, surpassing both Bloomberg and CMBI estimates. This growth was attributed to 356 new stores (vs CMBI's estimate of 208), lower food costs, and government and rental reliefs. Operating profit increased by 90% YoY, and the company is expected to maintain a mid-term growth story due to its superior execution, product innovation, and digital capabilities.

However, the outlook for the first quarter of 2021 (1Q21E) is cautious, with management anticipating significant headwinds. These include stricter government measures due to a mini COVID outbreak, weaker travel demand in transportation hubs, and lower demand in lower-tier cities due to workers advised to stay in their current locations. The GP margin in 1Q21E is expected to be flattish compared to 1Q20, as the benefits from lower poultry prices are offset by value campaigns, lower delivery demand, and eco-friendly packaging costs.

The company is expected to see a gradual recovery throughout FY21E, although the EBIT margin may remain subdued due to the absence of government and rental reliefs, as well as the need to hire more staff. The mid-term growth story remains intact, with KFC expansion and Pizza Hut reform continuing to drive performance.

Key Highlights

4Q20 Performance:
- Net profit: +68% YoY to US$151mn (beating estimates by 38% / 59%).
- Revenue growth: +11% YoY.
- Operating profit: +90% YoY.
1Q21E Outlook:
- Sales growth is expected to be weaker due to government restrictions, reduced social activities, and lower demand in lower-tier cities.
- GP margin may remain flat due to value campaigns, lower delivery demand, and eco-friendly packaging costs.
Mid-Term Growth:
- KFC expansion and Pizza Hut reform are key growth drivers.
- YUMC is targeting 1,000+ gross store openings in FY21E, ahead of CMBI's estimate of 900.
- Pizza Hut is expected to have a stronger rebound in FY21E, driven by menu upgrades, value for money, remodelling, and digital improvements.
Valuation:
- YUMC is trading at 31x FY21E P/E, which is attractive compared to peers such as HDL (74x) and JMJ (77x).
- The 21% EBIT CAGR from FY20 to FY23E highlights the company's growth potential.

Financial Summary

Earnings Summary

Metric	FY19A	FY20A	FY21E	FY22E	FY23E
Revenue (USD mn)	8,776	8,263	9,626	10,864	12,028
YoY Growth (%)	4.3	-5.8	16.5	12.9	10.7
Net Income (USD mn)	713	784	809	975	1,141
Diluted EPS (USD)	1.81	1.89	1.85	2.22	2.58
YoY Growth (%)	1.8	4.5	-2.2	19.8	16.4
Consensus EPS (USD)	n/a	n/a	2.02	2.34	2.92
P/E (x)	30.9	29.6	30.3	25.3	21.7
P/B (x)	6.7	3.9	3.5	3.2	2.8
Yield (%)	0.9	0.4	0.8	1.0	1.1
ROE (%)	23.2	17.0	12.7	13.6	14.2
Net Gearing (%)	Net cash	Net cash	Net cash	Net cash	Net cash

Earnings Revision

Metric	New (FY21E)	New (FY22E)	New (FY23E)	Old (FY21E)	Old (FY22E)	Old (FY23E)	Diff (%)
Revenue	9,626	10,864	12,028	9,818	10,930	n/a	-2.0% / -0.6% / n/a
Operating Profit	976	1,241	1,445	1,089	1,329	n/a	-10.3% / -6.6% / n/a
Net Profit	809	975	1,141	878	1,057	n/a	-7.8% / -7.7% / n/a
EPS (US$ cents)	1.850	2.215	2.578	2.017	2.413	n/a	-8.3% / -8.2% / n/a
Gross Margin	71.7%	72.1%	72.1%	71.7%	72.0%	n/a	Oppt / Oppt / n/a
Operating Margin	10.1%	11.4%	12.0%	11.1%	12.2%	n/a	-0.9ppt / -0.7ppt / n/a
Net Profit Margin	8.4%	9.0%	9.5%	8.9%	9.7%	n/a	-0.5ppt / -0.7ppt / n/a

Key Assumptions

Metric	FY18A	FY19A	FY20A	FY21E	FY22E	FY23E
Sales by segment (RMB mn)	-	-	-	-	-	-
KFC - Eat in sales	4,882	4,911	4,137	4,672	5,107	5,421
KFC - Delivery sales	808	1,129	1,617	2,128	2,617	3,166
Pizza Hut - Eat in sales	1,611	1,527	1,146	1,249	1,317	1,385
Pizza Hut - Delivery sales	500	527	642	755	861	964
Others	614	682	721	823	961	1,091
Total	8,415	8,776	8,263	9,626	10,864	12,028
Sales by segment growth (%)	-	-	-	-	-	-
KFC - Eat in sales	9.2%	0.6%	-15.8%	12.9%	9.3%	6.1%
KFC - Delivery sales	35.8%	39.7%	43.2%	31.6%	23.0%	21.0%
Pizza Hut - Eat in sales	-3.5%	-5.2%	-25.0%	9.0%	5.5%	5.1%
Pizza Hut - Delivery sales	18.1%	5.4%	21.7%	17.7%	14.0%	12.0%
Others	0.7%	11.1%	5.8%	14.1%	16.8%	13.6%
Total	8.3%	4.3%	-5.8%	16.5%	12.9%	10.7%

Valuation Table

Company	Ticker	Rating	12m TP (LC)	Price (LC)	Up/Downside	Mkt. Cap (HK$mn)	P/E (x)	P/B (x)	ROE (%)	3yrs PEG (x)	Yield (%)
Yum China	YUMC US	BUY	66.59	55.98	+19%	182,271	29.6 / 30.3	3.9 / 3.5	23.2	4.3	0.4
Jiumaojiu	9922 HK	BUY	20.88	30.45	-31%	44,256	747.6 / 77.3	15.0 / 12.7	101.4	16.0	0.0
Haidilao	6862 HK	BUY	53.56	76.85	-30%	407,305	401.0 / 73.5	30.0 / 20.4	5.2	10.2	0.1
Cafe De Coral	341 HK	BUY	18.37	16.64	+10%	9,746	25.6 / 22.9	3.6 / 3.4	3.0	0.3	2.8
Xiabuxiabu	520 HK	NR	n/a	21.00	n/a	22,790	674.3 / 36.1	7.9 / 6.6	-6.0	20.2	0.1
Yihai	1579 HK	NR	n/a	132.30	n/a	138,505	114.6 / 84.5	31.7 / 24.1	34.3	3.3	0.5
Gourmet Master	2723 TT	NR	n/a	131.00	n/a	6,538	23.6 / 17.6	2.1 / 1.9	8.1	1.1	2.4
Fairwood	52 HK	NR	n/a	17.50	n/a	2,267	n/a / 15.0	n/a / 2.8	9.3	n/a	2.3
Tai Hing	6811 HK	NR	n/a	1.57	n/a	1,573	41.3 / 9.8	3.2 / 3.0	11.5	1.2	1.3
Hop Hing	47 HK	NR	n/a	0.04	n/a	423	n/a / n/a	n/a / n/a	-4.2	n/a	n/a
Ajisen China	538 HK	NR	n/a	1.27	n/a	1,386	19.6 / 11.7	7.9 / 6.6	-1.2	n/a	2.8
Yihai	1579 HK	NR	n/a	132.30	n/a	138,505	114.6 / 84.5	31.7 / 24.1	34.3	3.3	0.5
Vitasoy	345 HK	NR	n/a	33.55	n/a	35,727	51.8 / 48.6	10.2 / 9.2	19.7	2.7	1.2
Want Want*	151 HK	BUY	7.36	5.60	+31%	68,123	13.8 / 13.3	3.6 / 3.5	28.8	1.4	6.1
China Mengniu*	2319 HK	BUY	42.00	46.85	-10%	184,969	45.1 / 29.8	3.6 / 3.5	11.5	2.8	0.5

Conclusion

Yum China (YUMC US) remains a BUY recommendation due to its strong execution, product innovation, and digital capabilities, despite short-term challenges in 1Q21E. The target price has been adjusted to US$66.59, reflecting a 36x FY21E P/E. The company's valuation is considered attractive compared to its peers, with a 21% EBIT CAGR expected from FY20 to FY23E. The mid-term growth story is intact, and the company is expected to recover gradually throughout FY21E.