20240209-招银国际-Impressive_cash_return_but_a_prudent_1Q24E_8页_1mb

The Bloom Bernd analyst report covers Yum China Holdings for February 9, 2024, maintaining a BUY rating with a reduced target price to US$49.59, reflecting a 25.1% downside from current levels based on conservative 24x forward P/E. Key highlights include an impressive Q4 2023 beat with strong cash returns, driven by higher same-store sales (SSSG) growth and shareholder-friendly measures like dividend increases and share buybacks. Despite cautious views on Q1 2024E due to a tough comparison base and expected flat core operating profit margin, the outlook remains constructive for the full year, with expectations of sequential recovery in SSGG in FY24E supported by rapid store expansion, new product innovation, and widening price ranges. The company is projected to expand store counts moderately in FY24E, amid increased competition. Financial metrics show steady revenue growth and rising profitability, with P/E ratios declining to 19.2x for FY24E. The recommendation includes a pair trade long YUMC hedged with other catering stocks, emphasizing Yum China's potential market share gains from innovative and cheaper products.