Acquisition of PH China a strategic positive: Yum China’s latest acquisition gives it more operational flexibility, in our view; retain Buy rating

Research evidence excerpt

Acquisition of PH China a strategic positive: Yum China’s latest acquisition gives it more operational flexibility, in our view; retain Buy rating

Global Markets Research

Yum China YUMC.N YUMC US 17 June 2026

EQUITY: CONSUMER RELATED

RatingAcquisition of PH China a strategic positive Remains Buy

Target priceYum China’s latest acquisition gives it more operational Remains USD 59.50

flexibility, in our view; retain Buy rating

Closing price

16 June 2026 USD 43.65Acquisition of full ownership of Pizza Hut in mainland China

Yum China announced (16 June) that the company will acquire the full ownership of the Implied upside +36.3%Pizza Hut brand in mainland China for a cash consideration of USD1.2bn, from Yum!

Brands (YUM US, Not rated); Yum Brands will also sell the Pizza Hut brands for non- Market Cap (USD mn) 15,240.3

mainland Chinese markets for a consideration of USD1.5bn to another financial investor. ADT (USD mn) 74.2

• After the acquisition, Yum China will no longer pay the licence fee for using the Pizza

Hut brand to Yum! Brands (equivalent to 3% of the system sales of the Pizza Hut Relative performance chart

restaurants).

• In addition, Yum China will have greater flexibility in: 1) store expansion of Pizza Hut

in China, especially in lower-tier cities under the franchise model, which remains a key

strategy for Yum China’s growth, 2) operations of the Pizza Hut business, such as

introduction of new store formats tailored to the Pizza Hut brand, and 3) product

innovation, including customization and localization of Pizza Hut products in a more

timely manner, in our view. Considering the fierce competition of the Chinese catering

sector, we believe the increased operational freedom of the Pizza Hut brand should