External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>3Q23 result was a miss, due to weak demand, slow SSSG and intense competition.</li><li>We think Yum China has turned more active to gain or at least retain its market share, perhaps at the expenses of lower GP margin and higher opex (e.g. staff costs).</li><li>But thanks to low valuation (after our earnings cut), we maintain BUY.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

3Q23 result was a miss, due to weak demand, slow SSSG and intense competition.We think Yum China has turned more active to gain or at least retain its market share, perhaps at the expenses of lower GP margin and higher opex (e.g. staff costs).But thanks to low valuation (after our earnings cut), we maintain BUY.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yum China (9987 HK) – 3Q23 Result Missed and We Will Stay Cautious

<ul><li>During the 2023 YUMC Investor Day in Xian (last time was in Shanghai in 2019), its management raised the FY23E target and gave a time frame for its mid-term target of 20,000 stores in China (by FY26E).</li><li>We believe such acceleration in growth during FY24E-26E is based on YUMC’s years of refinement in unit economics and a confident answer to the speeding up in industry consolidation.</li><li>Hence, we maintain BUY and lift TP to HK$ 609.41, based on 27x FY24E P/E (unchanged).</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

During the 2023 YUMC Investor Day in Xian (last time was in Shanghai in 2019), its management raised the FY23E target and gave a time frame for its mid-term target of 20,000 stores in China (by FY26E).We believe such acceleration in growth during FY24E-26E is based on YUMC’s years of refinement in unit economics and a confident answer to the speeding up in industry consolidation.Hence, we maintain BUY and lift TP to HK$ 609.41, based on 27x FY24E P/E (unchanged).Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yum China (9987 HK) – Key Takeaways from YUMC 2023 Investor Day

<ul><li>1Q23 result was tremendous, and both sales recovery and margins are better than expected.</li><li>YUMC is still one of our sector top picks, as we think its margin and store expansion can continue to surprise the market.</li><li>Hence, we maintain BUY and raise TP to HK$ 595.15, based on 35x FY23E P/E (up from 33x).</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

1Q23 result was tremendous, and both sales recovery and margins are better than expected.YUMC is still one of our sector top picks, as we think its margin and store expansion can continue to surprise the market.Hence, we maintain BUY and raise TP to HK$ 595.15, based on 35x FY23E P/E (up from 33x).Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yum China (9987 HK) – Confidence increases after upbeat 1Q23 result

Thematic (Sector/Industry)

<ul><li>Numbers for catering sector did rebound strongly YoY, but since SSS/ table turnover recovery rate were not as good as expected, de-rating was massive in 1H23E.</li><li>After a disappointing 2Q23 plus worrying macro outlook, we downgrade the sector to MARKET-PERFORM as we see more downside in earnings.</li><li>However, as valuation turned more attractive, we can start to accumulate industry leaders. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Numbers for catering sector did rebound strongly YoY, but since SSS/ table turnover recovery rate were not as good as expected, de-rating was massive in 1H23E.After a disappointing 2Q23 plus worrying macro outlook, we downgrade the sector to MARKET-PERFORM as we see more downside in earnings.However, as valuation turned more attractive, we can start to accumulate industry leaders. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Catering Sector – Staying cautious after a disappointing 2Q23E

<ul><li>We project Li Auto’s net profit to rise 27% QoQ to RMB 1.2bn in 2Q23E. Profitability in FY24E could also beat expectation on greater economies of scale.</li><li>Apart from its products, we like the Company’s high self-discipline in costs and business expansion even as it is much more resourceful than before.</li><li>We project Li Auto’s 2Q23E revenue to more than triple YoY to RMB 27.9bn, as its sales volume beat guidance.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We project Li Auto’s net profit to rise 27% QoQ to RMB 1.2bn in 2Q23E. Profitability in FY24E could also beat expectation on greater economies of scale.Apart from its products, we like the Company’s high self-discipline in costs and business expansion even as it is much more resourceful than before.We project Li Auto’s 2Q23E revenue to more than triple YoY to RMB 27.9bn, as its sales volume beat guidance.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

CMBI Research Focus List (July Edition) – Our best high conviction stock ideas

China

Yum China Holdings, Inc. operates chain restaurants. The Company offers pizza, entrees, pasta, rice dishes, appetizers, soups, vegetables, beverages, and desserts. Yum China Holding conducts its business worldwide.

Yum China Holdings (9987 HK)

Yum China (9987 HK) – 3Q23 Result Missed and We Will Stay Cautious

We think Yum China has turned more active to gain or at least retain its market share, perhaps at the expenses of lower GP margin and higher opex...

CMB International

Yum China (9987 HK) – Key Takeaways from YUMC 2023 Investor Day

We believe such acceleration in growth during FY24E-26E is based on YUMC’s years of refinement in unit economics and a confident answer to the...

CMB International

Yum China (9987 HK) – Confidence increases after upbeat 1Q23 result

YUMC is still one of our sector top picks, as we think its margin and store expansion can continue to surprise the market.

CMB International

China Catering Sector – Staying cautious after a disappointing 2Q23E

Numbers for catering sector did rebound strongly YoY, but since SSS/ table turnover recovery rate were not as good as expected, de-rating was...

CMB International

CMBI Research Focus List (July Edition) – Our best high conviction stock ideas

We project Li Auto’s net profit to rise 27% QoQ to RMB 1.2bn in 2Q23E. Profitability in FY24E could also beat expectation on greater economies of...

CMB International