Morgan Stanley: Yum China rated "outperform the market" with a target price raised to HK$428.

McGregor has released a research report stating that YUM CHINA (09987) has been rated as "outperforming the market." They expect a slowdown in same-store sales growth, coupled with a large portfolio of franchised stores, leading to a downward adjustment of the group's net profit forecast for 2025 and 2026 by 1.9% and 0.2%, respectively. The target price has been raised by 2%, from 420 Hong Kong dollars to 428 Hong Kong dollars. The report mentioned that same-store sales growth during the Chinese New Year period was slightly positive for YUM CHINA. As competitors slow down expansion or raise prices, management points out that competition is becoming more rational, which is driving an expansion in profit margins. For 2025, the report cites YUM CHINA management as stating that the goal is to open 1,600 to 1,800 new stores, with the net opening of franchised KFC and Pizza Hut stores expected to increase to 40-50% and 20-30% over the next few years. The group's dividend for the first quarter of this year has increased by 50%.