Yum China (09987) saw its shares climb nearly 3%, and as of the time of writing, the stock was up 2.42% to HK$397.8, with a turnover of HK$122 million. A research report from CLSA noted that Yum China's KFC brand has raised prices on its delivery menu, which the firm views as a well-timed move, also indicating that delivery subsidies are expected to decrease. The report anticipates a 7% increase in restaurant profits but expresses concern that the ongoing shift from dine-in to delivery could potentially dilute the positive impact of the price increases. CLSA considers these measures necessary for Yum China to expand KFC's profit margins while navigating the transition from a store-centric to a delivery-focused operational model. The firm believes the benefits of the price hikes will become apparent once this transition slows and same-store sales stop declining, although it cautions that the transformation itself will not be easy. Regarding performance, Citi has recently updated its quarterly earnings forecasts for Yum China, projecting a 3% year-on-year increase in total sales to $2.685 billion for the fourth quarter of last year, with full-year sales also expected to grow by 3%. Citi further predicts that Yum China's operating profit will increase by 11% year-on-year in the fourth quarter, with the group's operating profit margin expanding by 50 basis points to 6.3%, a forecast that exceeds the company's own guidance of being "roughly flat" compared to Q4 2024; net profit is expected to grow by 12%.
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