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1. Company Snapshot

1.a. Company Description

Yum China Holdings, Inc.owns, operates, and franchises restaurants in China.The company operates through two segments, KFC and Pizza Hut.


It operates restaurants under the KFC, Pizza Hut, Little Sheep, Huang Ji Huang, Lavazza, COFFii & JOY, Taco Bell, and East Dawning brands, which specialize in chicken, pizza, hot pot cooking, simmer pot, Italian coffee, specialty coffee, Mexican-style food, and Chinese food categories.The company also operates V-Gold Mall, a mobile e-commerce platform, which sells electronics, home and kitchen accessories, and other general merchandise, as well as fried rice, steak, pasta and other ready meals, and coffee capsules.In addition, it operates franchise restaurants under the KFC, Pizza Hut, Huang Ji Huang, Taco Bell, Little Sheep, East Dawning, Lavazza, and COFFii & JOY names.


As of March 31, 2022, the company operated 12,117 restaurants in approximately 1,700 cities.Yum China Holdings, Inc.was incorporated in 2016 and is headquartered in Shanghai, China.

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1.b. Last Insights on YUMC

The recent 3-month performance of Yum China Holdings, Inc. was negatively impacted by seasonality affecting quarterly performance, despite a 4.1% YoY increase in Q4 revenue to $2.5B, driven by KFC and Pizza Hut. The company's high-quality business model, digital adaptation, and membership sales strategy have enhanced customer retention and operational efficiency, leading to improved margins and stable cash returns. However, the macroeconomic challenges and fiscal stimulus in China have created uncertainty, potentially affecting the company's future performance.

1.c. Company Highlights

2. Yum China Delivers Strong FY 2025 Results

Yum China's financial performance in FY 2025 was robust, with system sales growth reaching 7% in Q4 and operating profit margin expanding to 10.9% for the full year, the highest since its US listing. The company's net income was $140 million, 22% higher year over year, while EPS came in at $0.355, slightly beating estimates of $0.35. Revenue growth was supported by the addition of over 1,700 net new stores, taking the total to over 18,000 stores across more than 2,500 cities.

Publication Date: Feb -05

📋 Highlights
  • Store Expansion Acceleration: Yum China opened 1,700 net new stores in 2025, raising total stores to 18,000+ across 2,500+ cities, with KFC adding 1,349 and Pizza Hut 444 new locations.
  • Margin Expansion: Operating profit margin hit 10.9% for the full year (2025), the highest since the US listing, driven by KFC’s 17.4% and Pizza Hut’s 12.8% restaurant margins.
  • Shareholder Returns: Returned $1.5 billion to shareholders via dividends and buybacks in 2025, supported by $840 million in free cash flow (18% YoY growth).
  • Delivery Growth Impact: Delivery mix surged to 48% in 2025 (up from 42% in 2024), yet margins improved 70 bps to 13.0% in Q4, with margin expansion expected to continue in 2026.
  • Brand-Specific Performance: Pizza Hut achieved 16% same-store transaction growth and 20% operating profit growth in 2025, while KFC’s system sales rose 5% YoY with Q4 growth at 8%.

Segment Performance

Both KFC and Pizza Hut exceeded expectations in 2025. KFC's system sales growth reached 8% in Q4 and 5% for the full year, while Pizza Hut's same-store transaction growth was 16% and operating profit growth was 20%. KFC opened 1,349 new stores, bringing its total to nearly 13,000 locations, with system sales growing 5% and restaurant margins expanding 50 basis points to 17.4%. Pizza Hut opened a record 444 net new stores, raising its total to 4,168 stores, with restaurant margins improving by 80 basis points to 12.8%.

Guidance and Outlook

For 2026, Yum China expects to reach more than 20,000 stores, with a total CapEx of $600 million to $700 million. Analysts estimate revenue growth at 5.5% for next year. The company's guidance suggests consistent growth with its three-year plan shared at the Investor Day. As Joey Wat mentioned, "At Pizza Hut, we're focusing on our hero product, the super supreme pizza, by pairing it with classic Bolognese and trendy salted egg yolk toppings," indicating a continued focus on innovation and customer preferences.

Valuation Metrics

With a P/E Ratio of 20.54 and an EV/EBITDA of 12.28, the market seems to have priced in a reasonable growth trajectory for Yum China. The company's ROE (%) stands at 16.41, indicating a strong return on equity. Additionally, the Dividend Yield (%) is 1.81, and the Free Cash Flow Yield (%) is 5.05, suggesting a decent return for investors. The Net Debt / EBITDA ratio is 0.85, indicating a manageable debt position.

3. NewsRoom

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Yum China (NYSE:YUMC) CEO Joey Wat Sells 104,000 Shares of Stock

Feb -18

Source: defenseworld.net

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First Look: WBD waiver; Ackman's Meta bet; Ford-China JV

Feb -17

Source: gurufocus.com

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Yum China Holdings: Quarter And FYE Results Were Tasty Indeed! Reiterating A Strong Buy

Feb -16

Source: seekingalpha.com

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Caprock Group LLC Purchases Shares of 30,980 Yum China $YUMC

Feb -15

Source: defenseworld.net

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3 Restaurant Stocks to Buy Despite Ongoing Industry Pressures

Feb -13

Source: zacks.com

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Is WalMart de Mexico (WMMVY) Outperforming Other Retail-Wholesale Stocks This Year?

Feb -12

Source: zacks.com

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YUMC or SHAK: Which Is the Better Value Stock Right Now?

Feb -11

Source: zacks.com

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Yum China (NYSE:YUMC) Given Consensus Rating of “Moderate Buy” by Brokerages

Feb -10

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.81%)

6. Segments

KFC

Expected Growth: 4.8%

Yum China’s KFC chain is poised for growth driven by increasing demand for convenient, affordable dining and a growing middle class in China, as well as the brand’s successful digitalization efforts and menu innovations.

All Other Segments

Expected Growth: 4.5%

Yum China's non-core segments, including East Dawning and Coco, will drive growth through expansion into new markets and increased demand for convenience and delivery services.

Pizza Hut

Expected Growth: 4.5%

Yum China Holdings’ Pizza Hut segment growth is driven by increasing demand for convenience food, rising disposable income, and expansion into smaller cities and towns in China.

Corporate and Unallocated

Expected Growth: 5.4%

Yum China's Corporate and Unallocated segment growth is driven by increasing demand for digital payments, and investments in customer experience, which will continue to offset unallocated costs, driving a 5.4% CAGR.

Elimination

Expected Growth: 3.5%

Yum China Holdings, Inc.’s strategic elimination of unprofitable or underperforming locations is expected to drive growth, as resources are reallocated to high-potential areas, improving overall efficiency and profitability.

7. Detailed Products

KFC

KFC is a fast-food chain that specializes in fried chicken and other chicken-based meals.

Pizza Hut

Pizza Hut is a pizza chain that offers a variety of pizzas, pastas, and other Italian-American cuisine.

East Dawning

East Dawning is a Chinese fast-food chain that offers a variety of traditional Chinese dishes, including congee, noodles, and rice bowls.

Little Sheep

Little Sheep is a hot pot chain that offers a variety of hot pot options, including soup bases, meats, and vegetables.

COFFii & JOY

COFFii & JOY is a coffee shop chain that offers a variety of coffee drinks, pastries, and snacks.

Tao Xi

Tao Xi is a Chinese fast-food chain that offers a variety of traditional Chinese dishes, including noodles, rice bowls, and snacks.

8. Yum China Holdings, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Yum China Holdings, Inc. faces moderate threat from substitutes as consumers have various options for dining out or ordering in, but the company's strong brand recognition and loyalty programs help to mitigate this threat.

Bargaining Power Of Customers

Yum China Holdings, Inc. has a large customer base, but individual customers do not have significant bargaining power due to the company's large scale and diversified customer base.

Bargaining Power Of Suppliers

Yum China Holdings, Inc. has a moderate level of dependence on suppliers, particularly for ingredients and packaging materials, but the company's scale and negotiating power help to mitigate this threat.

Threat Of New Entrants

Yum China Holdings, Inc. operates in a highly competitive market, but the company's strong brand recognition, established supply chain, and regulatory hurdles make it difficult for new entrants to gain significant market share.

Intensity Of Rivalry

Yum China Holdings, Inc. operates in a highly competitive market with many established players, leading to intense rivalry and pricing pressure, but the company's strong brand recognition and operational efficiency help to mitigate this threat.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 28.37%
Debt Cost 3.95%
Equity Weight 71.63%
Equity Cost 6.21%
WACC 5.57%
Leverage 39.61%

11. Quality Control: Yum China Holdings, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

55.5$

Current Price

55.5$

Potential

-0.00%

Expected Cash-Flows