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>Sales growth was indeed a miss in 2Q24, but the net profit was a significant beat.</li><li>For 2H24E, we are still very cautious about the demand and so as the level of competition.</li><li>However, thanks to various efforts like Project Fresh Eye, Project Red Eye, rationalizing number of SKUs, more direct sourcing, and rampup of more profitable store formats (e.g. K-coffee and Pizza Hut’s WOW model) etc., we are confident on a turnaround in 4Q24E. </li></ul><p><em>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.</em></p>

Sales growth was indeed a miss in 2Q24, but the net profit was a significant beat.For 2H24E, we are still very cautious about the demand and so as the level of competition.However, thanks to various efforts like Project Fresh Eye, Project Red Eye, rationalizing number of SKUs, more direct sourcing, and rampup of more profitable store formats (e.g. K-coffee and Pizza Hut’s WOW model) etc., we are confident on a turnaround in 4Q24E. 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 (YUMC US) - The Best-In-Class Costs Management in 2Q24

Equity Analyst - Asia Consumer Sector, Investory

Devi Subhakesan

Equity Analyst - Asia Consumer Sector

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yum-china-holdings-inc-0533692c-6dae-4014-baa1-ed0b050638f2" target="_blank" data-smartkarma-citation="entities:29259:1" rel="noopener">Yum China Holdings (9987 HK)</a> reported a marginal 1% year-on-year increase in 2Q2024 revenue, driven by new store additions despite a decline in same-store sales.</li>
<li>Despite a challenging business environment, it achieved 8% year-on-year profit growth in Q2 and stabilised margins through sharp cost management and operational efficiency initiatives.</li>
<li>Without a clear visibility in improvement in consumer sentiment and spending, expect the tough operating environment to limit Yum China's revenue and profit growth potential.</li>
</ul>



Yum China Holdings (9987 HK) reported a marginal 1% year-on-year increase in 2Q2024 revenue, driven by new store additions despite a decline in same-store sales.
Despite a challenging business environment, it achieved 8% year-on-year profit growth in Q2 and stabilised margins through sharp cost management and operational efficiency initiatives.
Without a clear visibility in improvement in consumer sentiment and spending, expect the tough operating environment to limit Yum China's revenue and profit growth potential.


Yum China (9987 HK): 2Q 2024 - Market Expansion Can't Mask Macro Woes

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>China State Construction International and Sinopec Engineering have short term reversal patterns indicating profit taking from recent advances.</li>
<li>China Resources Cement reverses downtrend with volume indicating some near term gains after reporting that 1st half profit was under pressure.</li>
<li>Yum China continues to show downward pressure given the increasing competition in the retail food segment, while Nongfu Spring collapses on news about the safety of its products.</li>
</ul>


China State Construction International and Sinopec Engineering have short term reversal patterns indicating profit taking from recent advances.
China Resources Cement reverses downtrend with volume indicating some near term gains after reporting that 1st half profit was under pressure.
Yum China continues to show downward pressure given the increasing competition in the retail food segment, while Nongfu Spring collapses on news about the safety of its products.


Technically Speaking: Breakouts & Breakdowns: HONG KONG (July 17)

Greater China Equity Long/Short Analyst

Eric Chen

<ul>
<li>The company’ share bucked China catering sector’s down trend and rallied 30% in last few weeks.</li>
<li>Its 2Q operating data suggest that its store opening is well on track with healthy SSSG, underpinning strong margin expansion.</li>
<li>We believe that market still underestimates its growth and earnings potential which could beat consensus by wide margin. Interim results to be announced in August will be key catalyst.</li>
</ul>


The company’ share bucked China catering sector’s down trend and rallied 30% in last few weeks.
Its 2Q operating data suggest that its store opening is well on track with healthy SSSG, underpinning strong margin expansion.
We believe that market still underestimates its growth and earnings potential which could beat consensus by wide margin. Interim results to be announced in August will be key catalyst.


DPC Dash (1405 HK): Strong 2Q Data Pointing to Underappreciated Growth and Margin Potential

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/guzman-y-gomez" target="_blank" data-smartkarma-citation="entities:43656:1" rel="noopener"></a><a href="https://www.smartkarma.com/entities/guzman-y-gomez" target="_blank" data-smartkarma-citation="entities:43656:1" rel="noopener">Guzman Y Gomez </a> raised around US$221m in its upsized Australian IPO. </li>
<li>GYG is a quick service restaurant business with more than 200 restaurants globally. It mainly focuses on fresh, made-to-order, Mexican-inspired food.</li>
<li>We have looked at the company’s performance  and valuation in our past notes. In this note, we talk about the trading dynamics.</li>
</ul>



Guzman Y Gomez  raised around US$221m in its upsized Australian IPO. 
GYG is a quick service restaurant business with more than 200 restaurants globally. It mainly focuses on fresh, made-to-order, Mexican-inspired food.
We have looked at the company’s performance  and valuation in our past notes. In this note, we talk about the trading dynamics.


Guzman Y Gomez IPO Trading - Strong Demand, Not All Shares in Escrow

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.

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Yum China Holdings (YUMC US)

Yum China (YUMC US) - The Best-In-Class Costs Management in 2Q24

Sales growth was indeed a miss in 2Q24, but the net profit was a significant beat. For 2H24E, we are still very cautious about the demand and so as...

CMB International

Yum China (9987 HK): 2Q 2024 - Market Expansion Can't Mask Macro Woes

Unless macro economic headwinds ease, the stock - currently trading at the low end of its historical valuation range (14X P/E and 2% dividend...

Devi Subhakesan

Technically Speaking: Breakouts & Breakdowns: HONG KONG (July 17)

Sinopec Engineering and China State Construction have entered short term corrections while CRC has broken its downtrend in the near term. Yum...

David Mudd

DPC Dash (1405 HK): Strong 2Q Data Pointing to Underappreciated Growth and Margin Potential

DPC Dash's strong 2Q operating data indicate healthy growth potential and margin expansion that are underestimated by market. Interim results in...

Eric Chen

Guzman Y Gomez IPO Trading - Strong Demand, Not All Shares in Escrow

Guzman Y Gomez raised around US$221m in its upsized Australian IPO. Demand was said to be strong, as per media reports. In this note, we talk...

Sumeet Singh

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