Company Coverage
Yum China Holdings, Inc (9987 HK / YUMC US): 2Q26: Results Beat; PH’s Store Opening Targets Raised For 2027-28
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
HK$365.80
HK$513.70
+40.4%
HK$494.80
Analyst
Analyst
Highlights
- YUMC’s 2Q26 revenue beat consensus by 2%, driven by in-line SSSG and rapid store expansion. Operating profit beat consensus by 3%, driven by a better margin expansion of 0.2ppt yoy vs the previous guidance of a stable level. Looking ahead to 3Q26, management expects positive SSSG, stable to slightly positive restaurant margin and flat operating margin.
- For KFC, management has further raised the year-end target for K Pro to around 800 (earlier this year it raised the target from 400 to 600). For PH, the newly introduced Burger Bar side-by-side module, which reached over 200 stores in 1H26, is expected to expand to 500-600 locations by end-26. Furthermore, management also has raised PH net new openings to over 800 per year during 2027-28, up from the original target of over 600.
The PH brand acquisition is expected to add 2.8ppt to PH’s restaurant margin, translating to 0.6ppt for YUMC overall, and to be accretive to diluted to diluted EPS by a mid-single-digit percentage in 2027 and 2028. Maintain BUY and raise target price by 4% to HK$513.70.
Analysis
- 2Q26 SSSG in line and margin beat; rapid store expansion continued. Yum China Holdings, Inc (YUMC) reported its 2Q26 results. Total system sales grew 6% yoy, with same-store sales growth (SSSG) improving sequentially to 1%, in line with market expectations. Total revenue was US$3.1b, up 6% yoy (excluding forex, same below), beating market consensus by 2%. Adjusted operating profit was US$348m, up 7% yoy and beating market consensus by 3%, driven by operating margin expansion of 0.2ppt yoy to 11.1%, better than the previous guidance of a stable level. Restaurant margin was 16.1%, flat yoy. Adjusted net income was US$244m, up 6% yoy. Diluted EPS increased 14% yoy to US$0.70.
- In 2Q26, YUMC opened 560 net new stores (41% were opened by franchisees), bringing the total store count to 19,297 (vs its target of 20,000 by 2026).
Highlights
- YUMC’s 2Q26 revenue beat consensus by 2%, driven by in-line SSSG and rapid store expansion. Operating profit beat consensus by 3%, driven by a better margin expansion of 0.2ppt yoy vs the previous guidance of a stable level. Looking ahead to 3Q26, management expects positive SSSG, stable to slightly positive restaurant margin and flat operating margin.
- For KFC, management has further raised the year-end target for K Pro to around 800 (earlier this year it raised the target from 400 to 600). For PH, the newly introduced Burger Bar side-by-side module, which reached over 200 stores in 1H26, is expected to expand to 500-600 locations by end-26. Furthermore, management also has raised PH net new openings to over 800 per year during 2027-28, up from the original target of over 600.
The PH brand acquisition is expected to add 2.8ppt to PH’s restaurant margin, translating to 0.6ppt for YUMC overall, and to be accretive to diluted to diluted EPS by a mid-single-digit percentage in 2027 and 2028. Maintain BUY and raise target price by 4% to HK$513.70.
Analysis
- 2Q26 SSSG in line and margin beat; rapid store expansion continued. Yum China Holdings, Inc (YUMC) reported its 2Q26 results. Total system sales grew 6% yoy, with same-store sales growth (SSSG) improving sequentially to 1%, in line with market expectations. Total revenue was US$3.1b, up 6% yoy (excluding forex, same below), beating market consensus by 2%. Adjusted operating profit was US$348m, up 7% yoy and beating market consensus by 3%, driven by operating margin expansion of 0.2ppt yoy to 11.1%, better than the previous guidance of a stable level. Restaurant margin was 16.1%, flat yoy. Adjusted net income was US$244m, up 6% yoy. Diluted EPS increased 14% yoy to US$0.70.
- In 2Q26, YUMC opened 560 net new stores (41% were opened by franchisees), bringing the total store count to 19,297 (vs its target of 20,000 by 2026).
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
HK$365.80
HK$513.70
+40.4%
HK$494.80
Analyst
Analyst
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