德意志银行中国食品饮料行业2017年3季度预览20170908DeutscheBankYumChin

DeutscheBankMarketsResearchRatingHoldAsiaChinaConsumerFood&BeverageCompanyYumChinaDate8September2017ForecastChange3Q17previewReutersBloombergExchangeTickerYUMC.NYUMCUSNYSYUMCForecastsAndRatiosYearEndDec312015A2016A2017E2018E2019ESales(USDm)6,909.06,752.06,984.67,709.28,162.3EBITDA(USDm)857.0988.01,121.01,219.21,317.2ReportedNPAT(USDm)323.0502.0565.1640.4715.8ReportedEPSFD(USD)0.891.311.421.621.82DBEPSFD(USD)0.891.311.421.621.82OLDDBEPSFD(USD)0.891.271.471.601.79%Change0.0%3.1%-3.6%1.3%1.5%DBEPSgrowth(%)–47.28.214.312.5PER(x)–20.425.322.119.6EV/EBITDA(x)–9.011.210.08.9DPS(net)(USD)0.000.000.370.510.57Yield(net)(%)–0.01.01.41.6Source:DeutscheBankestimates,companydata1DBEPSisfullydilutedandexcludesnon-recurringitems2Multiplesandyieldscalculationsuseaveragehistoricalpricesforpastyearsandspotpricesforcurrentandfutureyears,exceptP/BwhichusestheyearendcloseMaintainingHoldatatargetpriceofUSD37.09________________________________________________________________________________________________________________DeutscheBankAG/HongKongDeutscheBankdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Thus,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.DISCLOSURESANDANALYSTCERTIFICATIONSARELOCATEDINAPPENDIX1.MCI(P)083/04/2017.Priceat7Sep2017(USD)35.80Pricetarget-12mth(USD)37.0952-weekrange(USD)41.70-24.24S&P5002,465AnneLingResearchAnalyst(+852)[e-mail]st(+852)[e-mail]yst(+1)[e-mail]36.61to37.09↑1.3%Sales(FYE)6,924to6,985↑0.9%Opprofmargin(FYE)11.2to10.5↓-6.4%Netprofit(FYE)595.6to565.1↓-5.1%Source:DeutscheBankPrice/pricerelative24283236404410/164/17YumChinaS&P500(Rebased)Performance(%)1m3m12mAbsolute-3.7-14.1–S&P500-0.61.312.8Source:DeutscheBankWeexpectYUMCtoreportan18%riseinNPtoRMB225monthebackofa5%riseinsalestoUSD1.98bn.WeexpectKFC’sSSStoacceleratevs.2Qduetothecontinuousmarketingcampaigninanimprovedmacroenvironment(Chinacateringsalesincreasedby11.9/11.1%forJun/Jul)andalowbasein3Q16.Onthecostside,weexpectGPMtobemaintainedyoyandsavingstocomefromoperationalandothercosts,givenbetterstoreproductivity.Wefine-tuneourforecastsandmaintainourHoldratingasitisfairlyvalued.For3Q17(Jun-Aug),weexpect18%riseinNPtoRMB225mThisisona5%riseinsalestoUSD1.98bn.WeexpectSSSgof5%forKFC,upfrom4%in2Q,as3Q16hadalowbase(affectedbytheSino-UStensionontheSouthSeadisputeinJul16).OnPH,weexpecta2%declineinSSS,duetohigherbaseandthecontinuingrevampingoftheoperation.RevisingNPforecastforFY17/18/19WereviseourFY17/18/19estimatesby-5%/-0.3%/+0.2%toreflectthelatestRMBtrend,revisitourEBITMassumption,andupdateourmodelbasedonitslatestsegmentbreakdown.Asaresult,ourrevisedtargetpriceisUSD37.09.Raisingourtargetpriceby1%toUSD37.09;risksOurprimaryvaluationmethodologyisDCF,employingCOEof9.2%,abetaof0.95andaTGRof2%.ThisproducesUSD37.09/share,implyinga2017/18P/Eof26x/23x.Upsiderisks:better-than-expectedoperatingmarginsandSSSg;lower-than-expectedintensityincompetition;andlower-than-expectedlaborcostincreases.Downsiderisks:intensecompetition;changesinconsumerpreferences;failuretopassoncosthikestocustomers;andfailuretooptimizestoreportfolio(seep.3).Distributedon:08/09/201713:45:46GMT0bed7b6cf11c8September2017Food&BeverageYumChinaPage2DeutscheBankAG/HongKongModelupdated:07September2017RunningthenumbersAsiaChinaFood&BeverageYumChinaReuters:YUMC.NBloomberg:YUMCUSHoldPrice(7Sep17)USD35.80TargetPriceUSD37.0952WeekrangeUSD24.24-41.70MarketCap(m)EURm11,423USDm13,724CompanyProfileThecompanyisasubsidiaryofYum!Brands(YUM.N)andholdsthefranchiseforYum!BrandsinChina.PricePerformance242832364044Oct16Jan17Apr17Jul17YumChinaS&P500(Rebased)MarginTrends48121620151617E18E19EEBITDAMarginEBITMarginGrowth&Profitability0510152025-4-2024681012151617E18E19ESalesgrowth(LHS)ROE(RHS)Solvency-60-50-40-30-20-100151617E18E19ENetdebt/equity(LHS)Netinterestcover(RHS)[e-mail]31-Dec201520162017E2018E2019EFinancialSummaryDBEPS(USD)0.891.311.421.621.82ReportedEPS(USD)0.891.311.421.621.82DPS(USD)0.000.000.370.510.57BVPS(USD)5.36.27.17.99.1Weightedaverageshares(m)363368386382379Averagemarketcap(USDm)na9,82313,72413,72413,724Enterprisevalue(USDm)na8,88712,51012,18811,774ValuationMetricsP/E(DB)(x)na20.425.322.119.6P/E(Reported)(x)na20.425.322.119.6P/BV(x)0.004.215.074.513.92FCFYield(%)na4.43.44.75.1DividendYield(%)na0.01.01.41.6EV/Sales(x)nm1.31.81.61.4EV/EBITDA(x)nm9.011.210.08.9EV/EBIT(x)nm15.217.114.712.8IncomeStatement(USDm)Salesrevenue6,9096,7526,9857,7098,162Grossprofit4,7504,8335,0465,5695,898EBITDA8579881,1211,2191,317Depreciation425402388391394Amortisation00000EBIT432586733828923Netinterestincome(expense)811111418Associates/affiliates4154616978Exceptionals/extraordinaries1521000Otherpre-taxincome/(expense)00000Profitbeforetax4966728059121,019Incometaxexpense168158225255285Minorities512141618Otherpost-taxincome/(expense)0