Dahua Jixian: Yum Sheng China (09987) third quarter same-store sales fell short of expectations, but operating profit beat expectations

The Zhitong Finance App learned that Dahua Jixian released a research report saying that Yum Sheng China (09987)'s same-store sales for the third quarter of 2026 fell 3% year on year, but after adjusting operating profit to beat expectations, the bank raised the 2026 profit forecast by 2%, kept the 2027 forecast unchanged, and reiterated the “buy” rating, and the target price remained at HK$513.7.

Yum China's adjusted operating profit for the third quarter rose 6% year on year, 3% higher than market expectations, benefiting from streamlined operations and favorable commodity costs, which led to an expansion in profit margins. In the third quarter, system sales increased 3% year over year; total revenue was 3.5 billion US dollars, excluding a 2% year-on-year increase in exchange, which was generally in line with expectations. After adjusted operating profit of US$451 million, the operating profit margin increased 0.5 percentage points to 13% year on year, which is better than the previous roughly flat guideline; restaurant profit margin was 17.8%, up 0.5 percentage points year on year. Adjusted net profit of US$311 million, up 3% year over year. A net total of 692 new stores were added during the period, bringing the total number of stores to 19,989.

Management expects that same-store sales will improve quarterly in the fourth quarter of 2026, same-store transaction volume will continue to grow, and operating profit margins will remain roughly flat year over year (excluding the acquisition of Pizza Hut, which contributed about 0.5 to 0.6 percentage points). The target for net new stores in 2026 was raised from 1,900 to over 2,400, which means that the number of stores will exceed 20,500 by the end of the year. In 2027, we target same-store sales growth of 0% to 2%, and diluted earnings per share recorded double-digit growth (including the increase in the number of units due to the acquisition of Pizza Hut).