Yum China (YUMC US) (Buy) - Acquisition of PH China a strategic positive

Research evidence excerpt

Yum China (YUMC US) (Buy) - Acquisition of PH China a strategic positive

Nomura | Yum China 17 June 2026

Company profile

Yum China Holding, Inc., headquartered in Shanghai, China, engages in the operation and management of restaurants and fast food chains. It is

China's largest restaurant company, operating over 10,000 restaurants in over 1,500 cities and towns across mainland China. It was once a

subsidiary of Yum!Brands (YUM US), which was carved out from the latter and went public on NYSE in 2016 and was secondary-listed on the HKEX

in September 2020. It now has the exclusive right to operate and sub-license the KFC, Pizza Hut and Taco Bell brands in China, owns the East

Dawning, Little Sheep, and Huang Ji Huang brands and partners with Lavazza to explore the Chinese market.

Valuation Methodology

Our target price of USD59.50 is based on 10x forward 12-month EV/EBITDA, a slight discount compared to its global peers. The benchmark index

for this stock is NASDAQ.

Risks that may impede the achievement of the target price

Downside risks include: 1) slow down of consumer consumption spending; 2) food safety issues; 3) Sino-US trade tensions; and 4) rising labour

costs and commodity costs.

ESG

The company focuses its efforts around three pillars: Environment, Food and People, or, more specifically, 1) Enhancing waste management,

through a Food Bank program to distribute surplus food to nearby residents in need and its pilot project to recycle used cooking oil; 2) Technology-

enabled food safety management, through the establishment of an intelligent online food safety and quality management system and the use of food

safety risk alert and assessment tools that leverage knowledge graphs; 3) Employee care and serving the community through the launch of an