Encouraging Growth on Track

研报英文原文证据摘录

Encouraging Growth on Track

IdeaM

Risk Reward - Yum China HoldingsTop PickInc. (YUMC.N)Risk Reward – Yum China Holdings Inc. (YUMC.N)

Leading high-quality play in China's restaurant industry; attractively valued

PRICE TARGET US$60.00 OVERWEIGHT THESIS

Base case, EV/EBITDA. We apply a target multiple of 10x to our 2026 EBITDA estimate, ▪Resilient business model - backed by

based on YUMC's average premium of 30% to China's consumer sector average EV/EBITDA product innovation, competitive pricing, and

since its listing in 2016. We think the premium is appropriate because YUMC consistently cost leadership - should drive unit, system

exhibits better execution in cost savings and efficiency improvements in comparison to peers. sales, and earnings growth despite a

The consumer sector is currently trading at ~8x 2026E EV/EBITDA. challenging macro climate.

efficiency-enhancing initiatives - US$61.02 ▪Consistent

including Project Red Eye, Project Fresh Eye,

Consensus Price Target Distribution US$54.20 US$73.65 and other digital-driven cost-saving MS PT

measures - should unlock margin expansionSource: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates

potential.

▪Digitalization and delivery execution

remain strong.

RISK REWARD CHART AND OPTIONS IMPLIED PROBABILITIES (12M) ▪New development opportunities include

new store formats (e.g., KCOFFEE and PH

USD WOW) and an increase in franchise stores to

capture untapped demand.

▪Current valuation at 8x 2026E EV/EBITDA

US$73.00(+59.21%)US$73.00US$73.00(+59.21%)(+59.21%) ProbProbProb (>73.00)~3.8%(>73.00)~3.8%(>73.00)~3.8% is attractive, considering OP CAGR of 10% in 80

2025-27 and 9% yield (dividend + buyback).

US$60.00(+30.86%)US$60.00US$60.00(+30.86%)(+30.86%)

60 ProbProbProb (>60.00)~15.7%(>60.00)~15.7%(>60.00)~15.7%