09987 Overview

Improvement in Consumption: This year's Chinese New Year holiday data indicates a recovery in the domestic consumption market, particularly in tourism, culture, and catering sectors, compared to last year.

Broker Optimism: UOB Kay Hian expresses optimism about structural consumption growth in China, highlighting potential policy support and overseas growth opportunities, especially in catering and experiential consumption.

Top Stock Picks: UOB Kay Hian's top stock recommendations include ANTA SPORTS, CHINA RES BEER, HAIDILAO, and YUM CHINA, all rated as Buy, with an Overweight rating for the domestic consumption sector.

Target Price Adjustments: The broker has adjusted target prices for several stocks based on CNY holiday consumption and travel data, increasing targets for HAIDILAO, LI NING, KWEICHOW MOUTAI, and WULIANGYE.

Lunar New Year Consumption Performance: The Lunar New Year holiday showed strong demand in catering and tourism, prompting Daiwa to recommend stocks like GUMING and YUM CHINA that benefit from this trend.

Economic Reflation Signs: The report highlighted initial signs of reflation in the Chinese economy driven by service consumption, with rising prices and reduced promotions in various sectors.

Catering Sector Outlook: Daiwa remains optimistic about GUMING and YUM CHINA, suggesting that a broader recovery in catering could enhance alcohol consumption at venues, while also favoring NONGFU SPRING and TINGYI due to domestic tourism.

Caution on MIXUE GROUP: Despite the positive outlook for many stocks, Daiwa expressed caution regarding MIXUE GROUP due to uncertain profit growth visibility, maintaining a Neutral rating.

UOB Kay Hian Coverage: UOB Kay Hian has initiated coverage on YUM CHINA (09987.HK) with a Buy rating and a target price of HKD494.8, despite a recent decline in stock price.

RGM3.0 Strategy: The firm's RGM3.0 strategy emphasizes resilience, growth, and competitive advantages, aiming to innovate products and models for diverse consumer needs while enhancing resource integration across its operations.

Sales Growth Targets: YUM CHINA aims for a same-store sales index of 100-102 from 2026 to 2028, projecting annual same-store sales growth of 0-2% and overall system sales growth in the mid to high single digits.

Market Activity: The stock has experienced significant short selling, with a short selling value of $101.89M and a ratio of 32.138%, indicating notable market activity and investor sentiment.

Spring Festival Travel Rush: The first week of the 2026 Spring Festival travel rush saw significant growth in passenger flows, with strong flight and hotel bookings, indicating a positive outlook for leisure travel demand during the holiday period.

Market Optimism: CICC expressed optimism regarding the recovery of the social services sector, anticipating that leading enterprises will experience price rebounds or restoration of same-store sales due to a stabilizing competitive landscape.

Investment Recommendations: BofAS highlighted that YUM CHINA's 4Q25 results exceeded expectations, leading to slightly raised EPS forecasts, and recommended several companies including Luckin Coffee and Atour Lifestyle Holdings for investors.

Short Selling Data: The report included short selling data for various companies, indicating varying levels of short interest, with notable figures for YUM CHINA and HAIDILAO among others.

Stock Performance: YUM China’s share price increased by 11% on February 5, following better-than-expected 4Q25 results, despite a current short selling ratio of 19.191%.

Market Analysis: Daiwa's research indicates a positive shift in investor sentiment regarding competition and pricing in China's catering industry, particularly benefiting KFC's same-store sales.

Profit Forecasts: Jefferies has raised its net profit forecasts for YUM China for 2026 and 2027, increasing the target price from HKD 450 to HKD 520.

Management Outlook: YUM China's management anticipates only a slight year-over-year increase in operating profit margin for 2026, but the improving competitive landscape may allow margins to exceed market expectations.