First Read: Yum China "YUMC eyes Jardine's KFC, Pizza Hut chains in Asia" (Buy)

Research evidence excerpt

First Read: Yum China "YUMC eyes Jardine's KFC, Pizza Hut chains in Asia" (Buy)

Global Research

12 May 2026ab

First Read

EquitiesYum China

YUMC eyes Jardine's KFC, Pizza Hut chains in China

Asia Restaurants

12-month rating Buy

12m price target US$67.60

What's in the news

According to Reuters news, YUMC and Carlyle Group are among potential bidders for

Jardine Matheson (JM)'s restaurant business unit, which runs ~1,000 KFC and Pizza Hut Price (11 May 2026) US$47.44

outlets and employs about 25,000 employees in Hong Kong, Macau, Myanmar, Taiwan RIC: YUMC.N BBG: YUMC US

and Vietnam. It also owns PHD, a take-out pizza chain in Hong Kong. According to the

Trading data and key metrics

news report, JM's restaurant unit generates an annual EBITDA of ~US$35-40mn (~2.3%

of YUMC's 2025 full year EBITDA), and the deal could potentially put its valuation to US 52-wk range US$57.95-42.31

$400mn, implying a 10-11.4x EV/EBITDA (read UBS China property team's report). Market cap. US$16.8b

Shares o/s 354m (ORD)

Our take Free float 96%

We estimate YUMC’s cash balance could reach ~US$950mn by end-2026 (including Avg. daily volume ('000) 396

CCE and short-term investments), after accounting for shareholder returns. In our view, Avg. daily value (m) US$20.4

YUMC's strong cash position suggests the company has sufficient financial flexibility to Common s/h equity (12/26E) US$4.88b

pursue a cash-funded acquisition if the deal proceeds. Additionally, we calculate the P/BV (12/26E) 3.2x

2025 EBITDA margin of JM's restaurant unit was 4-5%, compared to YUMC's EBITDA Net debt to EBITDA (12/26E) 0.5x

margin in the range of 14-15%. This implies the acquisition (if the deal proceeds) could

EPS (UBS, diluted) (US$)

enhance the margin and earnings of the acquired business, in our view. We also think