GF SEC has given YUM CHINA (09987) a "buy" rating with a fair value of 454.81 Hong Kong dollars.

GF SEC released a research report stating that they recommend a "buy" rating for YUM CHINA (09987), with an adjusted net profit of 9.8, 10.6, and 11.6 billion US dollars for the years 2025-2027. KFC's operation remains stable, Pizza Hut's positioning is being streamlined, and there are already over 200 WOW stores, which are expected to release brand vitality. The company continues to optimize single-store User Experience (UE), with strong expansion expectations and a maintained high level of shareholder returns, giving the company a 22 times PE for the year 2025, corresponding to a reasonable value of 454.81 Hong Kong dollars per share. GF SEC's main points are as follows: Company's financial performance for Q4 2024: (1) Q4 2024: Revenue of 25.95 billion US dollars, YoY +4%, core operating profit of 1.50 billion US dollars, YoY +35%, adjusted net profit of 1.15 billion US dollars, YoY +11%. (2) Full year 2024: Revenue of 113.03 billion US dollars, YoY +3%, core operating profit of 11.90 billion US dollars, YoY +12%, adjusted net profit of 9.11 billion US dollars, YoY +8%. Increase in target number of new stores for 2025 compared to 2024. In 2024, KFC added 1352 new stores to reach a total of 11648, Pizza Hut added 412 new stores to reach a total of 3724, and the company added a total of 1751 new stores (target of 1500) to reach 16395. The target for 2025 is to add 1600-1800 new stores. Continued generous shareholder returns. In 2024, the company repurchased 1.24 billion US dollars worth of shares and paid out 2.48 billion US dollars in dividends, totaling approximately 15 billion US dollars. The target for 2025-2026 is to continue repurchasing and issuing dividends, with a total of 30 billion US dollars, resulting in a return of 15 billion US dollars each year. The current market value corresponds to a return rate of 8.5%. The dividend per share for Q1 2025 is 0.24 US dollars, YoY +50%, totaling approximately 0.9 billion US dollars.