---
title: "Morningstar: Acquiring mainland Pizza Hut may be beneficial, giving YUM China a fair value of HKD 600 for its Hong Kong stocks"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/289993629.md"
description: "Morningstar released a research report, raising the fair value of YUM China’s US and Hong Kong stocks to $77 and HKD 600, respectively. The firm believes that YUM China's acquisition of full ownership of Pizza Hut China for $1.2 billion is attractive, being below a fair price-to-earnings ratio of 25 times. This move not only saves franchise fees but also enhances strategic flexibility, benefiting menu innovation and sales growth, and the current stock price is still undervalued"
datetime: "2026-06-17T03:23:06.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/289993629.md)
  - [en](https://longbridge.com/en/news/289993629.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/289993629.md)
---

# Morningstar: Acquiring mainland Pizza Hut may be beneficial, giving YUM China a fair value of HKD 600 for its Hong Kong stocks

According to Zhitong Finance APP, Morningstar released a research report stating that it has raised the fair value of Yum China (09987, YUMC.US) American Depositary Shares by 1% to $77, with a fair value of HKD 600 for its Hong Kong shares. The current stock price in the U.S. is approximately $45, which is still severely undervalued, with a price-to-earnings ratio of 13 times the 2027 forecast. The management has committed to returning 100% of free cash flow to shareholders.

Yum China has signed a definitive agreement with Yum! Brands (YUM.US) to acquire ownership of the Pizza Hut brand in China for $1.2 billion in cash. After the transaction is completed, Yum China will not need to pay any franchise fees to Yum! Brands. The deal is expected to be completed in the third quarter of 2026.

The firm believes that the $1.2 billion acquisition price is quite attractive relative to the fundamental economic conditions and growth potential of Pizza Hut China. Just from the perspective of saving franchise fees, this transaction can enhance the company's valuation, while the increased strategic flexibility brings additional growth potential. The $1.2 billion paid by Yum China is about 20 times the estimated savings from franchise fees in 2025, which is lower than the 25 times price-to-earnings ratio derived from the firm's fair value estimate. Strategic flexibility is expected to yield greater long-term benefits. Full ownership will enable Yum China to more quickly launch menu innovations, new store models, and IP collaboration projects, better aligning with consumer trends and promoting sales growth

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