20210205-招银国际-百胜中国-S-09987.HK-The_darkest_hour_is_just_before_the_dawn_7页_1mb

报告摘要

Yum China (9987 HK) Equity Research Summary

Core Content and Key Highlights

Yum China (YUMC) is currently rated as BUY, with a target price of HK$516.05, representing an up/downside of +17.8% from the current price of HK$438.00. The company's valuation is considered attractive at 31x FY21E P/E, compared to peers like HDL at 74x and JMJ at 77x.

Performance Overview

4Q20 Net Profit: Increased by 68% YoY to US$151 million, surpassing BBG and CMBI estimates by 38% and 59%, respectively. This was driven by 11% sales growth, lower food costs, and government and rental reliefs.
Operating Profit: Rose by 90% YoY in 4Q20 to US$789 million (constant FX: 78%).
Earnings Forecast: Revised down for FY21E and FY22E by 8%, due to weaker 1Q21 sales, higher capex, and increased staff and rental costs, although store openings are expected to be faster.

Outlook and Challenges

1Q21E Outlook: Management anticipates significant headwinds due to stricter government measures, weaker traveler demand, and reduced demand in lower-tier cities.
EBIT Margin: Expected to remain subdued in FY21E, as government and rental reliefs are no longer available, and higher staff costs are anticipated.
Long-Term Growth: Mid-term growth remains intact due to superior execution, product innovation, and digital capabilities.

Strategic Initiatives

KFC Expansion: Targeting gross openings of 1,000+ stores in FY21E, ahead of CMBI's estimate of 900.
Pizza Hut Reform: Expected to rebound strongly in FY21E, driven by menu upgrades (75%+ SKUs new or upgraded since Q2 2020), value for money, remodelling (40%+ stores since FY18), and enhanced digital and delivery experiences.
Digital Progress: Tableside ordering mix reached 37% in 4Q20, indicating strong digital adoption.

Financial Metrics

Metric	FY19A	FY20A	FY21E	FY22E	FY23E
Revenue (USD mn)	8,776	8,263	9,626	10,864	12,028
Net Income (USD mn)	713	784	809	975	1,141
Diluted EPS (USD)	1.81	1.89	1.85	2.22	2.58
P/E (x)	31.1	29.9	30.6	25.5	21.9
P/B (x)	6.7	3.9	3.5	3.2	2.8
ROE (%)	23.2	17.0	12.7	13.6	14.2
Net Gearing (%)	Net Cash	Net Cash	Net Cash	Net Cash	Net Cash

Valuation Comparison

Company	Ticker	Rating	12m TP (LC)	Price (LC)	Up/Downside	P/E (x)	P/B (x)	ROE (%)	3yrs PEG (x)	Yield (%)
Yum China	9987 HK	BUY	516.05	438.00	+17.8%	29.9	3.9	23.2	4.3	0.4
Jiumaojiu	9922 HK	BUY	20.88	30.45	-31%	747.6	15.0	101.4	16.0	0.0
Haidilao	6862 HK	BUY	53.56	76.85	-30%	401.0	73.5	5.2	10.2	1.0
Cafe De Coral	341 HK	BUY	18.37	16.64	+10%	25.6	3.6	3.0	1.9	2.8
Xiabuxiabu	520 HK	NR	n/a	21.00	n/a	674.3	3.5	18.0	3.1	1.3
Yihai	1579 HK	NR	n/a	132.30	n/a	114.6	4.8	19.7	3.2	1.2

Key Assumptions

Sales Growth: Expected to be 16.5% in FY21E, with KFC driving the majority of growth.
Costs: Increased staff costs, rental expenses, and value campaigns are expected to impact margins.
Margin Trends: Gross margin is expected to remain stable, while EBIT and net margins may be pressured.
Net Profit Margin: Expected to increase slightly from 8.1% in FY19A to 9.5% in FY23E.

Conclusion

Yum China's short-term challenges in 1Q21E are anticipated but are not expected to derail its long-term growth story, supported by its expansion plans, reforms, and digital transformation. Despite margin pressures, the company's valuation remains attractive compared to its peers, with a 21% EBIT CAGR projected for FY20-23E. The target price reflects a 36x FY21E P/E multiple, and the BUY rating is maintained due to strong execution and growth potential.