November 17th, 2017 Students: Company Action Price Target

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Camilla Richards
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1 November 17 th, 2017 Students: Tingliang Guo, Mohan Ru, David Wang Company: Yum China Holdings Inc (NYSE: YUMC) Action: Long Price Target: $58 (39% upside)

Overview Action: Long Price Target: $58 Upside: 39% Yum China Holdings Inc (NYSE:

Little Sheep, Taco Bell, East Dawning Earliest restaurant chain to adopt digital

Brands (YUM) on Nov 1, 2016 After the separation from YUM, YUMC will pay a 3%

China Joint headquarters: Shanghai, China and Plano, TX USA ~420,000 employees and

~5100 stores Pizza Hut (26% of sales): ~2000 stores Other Brands (4% of sales):

Enterprise Value 14,648 52 Week Hi / Lo 43.5 / 25.5 2018 EV / EBITDA 11.

2 Overview Action: Long Price Target: $58 Upside: 39% Yum China Holdings Inc (NYSE: YUMC) The largest restaurant company in China Brands includes KFC, Pizza Hut, Little Sheep, Taco Bell, East Dawning Earliest restaurant chain to adopt digital payment in China Spin off from Yum! Brands (YUM) on Nov 1, 2016 After the separation from YUM, YUMC will pay a 3% license fee to YUM for the right to sublicense KFC and PH intellectual property in China Joint headquarters: Shanghai, China and Plano, TX USA ~420,000 employees and ~7,300 restaurants over 1000 cities Core Brands (96% of sales): KFC (70% of sales): ~5100 stores Pizza Hut (26% of sales): ~2000 stores Other Brands (4% of sales): Capitalization Trading Stats Target Price Share Price (11/10) Total Shares Outs. 385 Market Cap 16,055 (-): Cash (1,477) (+): Debt - (+): Minority Interest 70 Enterprise Value 14, Week Hi / Lo 43.5 / EV / EBITDA 11.1x 2019 EV / EBITDA 10.2x 2018 P / E 25.4x 2019 P / E 22.7x Target Price $ 58 Implied Valuation Consensus Us 2018 EV / EBITDA 15.7x 13.5x 2019 EV / EBITDA 14.7x 11.0x 2018 P / E 35.9x 28.2x 2019 P / E 32.1x 21.7x Source: Company Information, Capital IQ 1

The Western-Style QSR 1 Industry in China Highly

QSR industry in China is highly fragmented Rapid,

followed by McDonald s Digital + delivery key to competing

3 The Western-Style QSR 1 Industry in China Highly fragmented industry, rapid growth, KFC dominant, cashless QSR industry in China is highly fragmented Rapid, sustainable sales growth KFC largest chain by unit count, followed by McDonald s Digital + delivery key to competing Source: Company report, McKinsey & Company 1.QSR Quick Service Restaurant 2

4 Why Yum China? 1 Store count grows at high-single-digit in a rapidly growing, under-penetrated market (especially in lower-tier cities), increasing margins with operating leverage 2 SSSg improves to mid-single-digit with best-in-class integrated digital + delivery ecosystem the Domino s model 3 Local, experienced, and focused management could deliver additional upside from Pizza Hut turnaround 3

5 1 Historical store growth impressive, but potential even greater Still low penetration in a young, rapidly richer, and urbanizing economy China s QSR industry in 10x under-indexed Lower-tier cities further below average ,263 South Korea 927 Taiwan 694 Japan 524 USA Source: Worldbank, Statista, Broker Research No of Fast Food Chain / MM population, Hong Kong Singapore Thailand Malaysia Philipines Avg = 351 QSR penetration correlated with GDP per capita, suggesting China has huge potential to grow GDP per Capita 70,000 60,000 50,000 40,000 30,000 20,000 China 10,000 Vietnam 6.0% GDP GAGR => Store # up 10x in 10 years India China, 2027 Singapore China Indonesia Taiwan South Korea Thailand Philipines Vietnam Japan India # of Western QSR / MM population 24,072 14,926 12,343 10,771 9,671 7,578 5,105 2,279 Hong Kong Malaysia Avg GDP of City Tiers 0 0% 5% 10% 15% 20% 25% Chain Restaurants as % Total Restaurant USA 4

6 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 1 Why does growth matter? Business has significant operating leverage Large fixed cost base (eg rent) creates significant operating leverage. Growth is important to cash flow growth Expansion into 2 nd and 3 rd tier cities likely to further lower % occupancy costs, as lower rents support same menu pricing and traffic 39% 37% 35% 33% 31% 29% 27% 25% Significant Operating Leverage Costs as % of Revenue Store Count significant driver of cash flow Store Count & Restaurant Margins % % % % % 8% % % % 0 0% Store Count Growth Restaurant Margin Occupany Costs Food and Paper Cash Flow % of Revenue Source: company infomrmation 5

2 YUMC has the most integrated digital ecosystem in QSR KFC Leader in digital: - KFC ios App ranks No 3 in Food and Drink Category (top 2 apps are aggregators).

7 2 YUMC has the most integrated digital ecosystem in QSR KFC Leader in digital: - KFC ios App ranks No 3 in Food and Drink Category (top 2 apps are aggregators). Downloaded 30 million times - Top two QSR brands are KFC and Pizza Hut Benefits: - Deliver SSSg without need to remodel / expand store - Higher margins from savings on labor and other opex - Customer loyalty: 33% of KFC sales comes from KFC members, helped by the launch of KFC Super App - Potential new business model (eg high speed rail sale) Source: aso100.com, company information 6

roughly 80 times the size of America s $112 billion market - China s mobile payment lead due to lack of alternatives (such as

8 2 Why does digital matter in China? The Amazon retail effect: digital is necessity China's Cashless Revolution - In 2016, China s mobile payments hit $9 trillion, roughly 80 times the size of America s $112 billion market - China s mobile payment lead due to lack of alternatives (such as convenient credit card) and low denomination of paper currency - Digital strategy lynchpin to success in China, where availability of mobile channels can drive purchase decisions, especially young consumers Source: iresearch, Wall Street Journal 7

9 2 Why does digital matter? Case Study - Domino's Pizza in US The Internet of Pizza just the latest digital topping for Domino s (NYSE:DPZ) - Domino s builds customer loyalty and lowers costs with bestin-class digital tech in US - Between 2006 and 2008 Domino s Pizza was in crisis negative SSSg and plummeting sales - Launched app April digital sales surpass $ 1 billion within one year. SSSg improves to 10% by Immense shareholder value from successful strategy In US Market Source: Domino s Pizza company information 8

3 Strong potential upside from Pizza Hut New management experienced with turnarounds - Under Joey Wat since 2014, KFC staged impressive turnaround after being hit by food safety scandals - Joey

local favorites o Moving to digital: Pizza Hut launched app in July 2017 and has synchronized membership with KFC o New models: store and image upgrade, Bistro - Long-term effort with short-term

10 3 Strong potential upside from Pizza Hut New management experienced with turnarounds - Under Joey Wat since 2014, KFC staged impressive turnaround after being hit by food safety scandals - Joey became YUMC COO in Feb 2017 and will be CEO in March Significant knowledge transfer to Pizza Hut with replicable turnaround strategies o Focus on food: slimdown of menu to focus on hits and local favorites o Moving to digital: Pizza Hut launched app in July 2017 and has synchronized membership with KFC o New models: store and image upgrade, Bistro - Long-term effort with short-term pain: investors remain in show-me mode. Potential upside as results prove KFC SSSg rebounded from food scandals under Ms. Wat Joey Wat took charge of KFC Pizza hut is rapidly moving digital following KFC playbook KFC s SSSG improved from -14% in FY13 to 3% in FY16 KFC s restaurant margin increased from 11.4% in FY13 to 16.3% in FY16 Pizaa Hut SSSg turns positive Source: company information 9

11 3 How much difference does Pizza Hut turnaround make? Key to Maintain Restaurant Margins Sensitivty of 2019 EBITDA to Pizza Hut Turnaround Pizza Hut Restaurant Margin in % 14.0% 16.0% 18.3% 20.0% 22.0% -2.4% 1,693 1,736 1,779 1,829 1,865 1, % 1,731 1,774 1,817 1,866 1,903 1,946 Pizza Hut 1.6% 1,770 1,813 1,856 1,905 1,942 1,985 Avg SSSg 3.6% 1,810 1,853 1,896 1,945 1,982 2, % 1,850 1,893 1,936 1,985 2,022 2, % 1,892 1,935 1,978 2,027 2,064 2, % 1,935 1,978 2,021 2,070 2,107 2, % 1,979 2,022 2,065 2,114 2,151 2,194 Sensitivty of Share Price to Pizza Hut Turnaround (Based on 2019 EV / EBITDA) Pizza Hut Restaurant Margin in % 14.0% 16.0% 18.3% 20.0% 22.0% -2.4% % Pizza Hut 1.6% Avg SSSg 3.6% % % % %

12 Valuation Base Case How we differ from consensus Our View Consensus Difference 2017E 2018E 2019E 2020E 2017E 2018E 2019E 2020E 2017E 2018E 2019E 2020E Revenue 7,062 7,922 9,160 10,637 Revenue 7,035 7,552 8,059 8,647 Revenue 0.4% 4.9% 13.7% 23.0% % Growth 4.5% 12.2% 15.6% 16.1% % Growth 4.2% 7.3% 6.7% 7.3% % Growth EBITDA 1,331 1,555 1,905 2,174 EBITDA 1,196 1,332 1,428 1,576 EBITDA 11.3% 16.7% 33.4% 38.0% % Margin 18.8% 19.6% 20.8% 20.4% % Margin 17.0% 17.6% 17.7% 18.2% % Margin EPS EPS EPS 24.0% 27.3% 48.4% 45.8% % Growth 29.0% 17.2% 30.2% 16.1% % Growth 4.0% 14.1% 11.7% 18.2% % Growth Key assumptions: - Store count CAGR: 7% for KFC, 10% for Pizza Hut, hitting managements LT target of 20k stores in 10 years - SSSg: gradual increase on digital + delivery leverage, with KFC converging to Domino s current SSSg in the next two years - Margins: assume slight leverage on occupancy costs (expansion into lower-tier cities) and labor costs (digital channels) - Capex: assume baseline per-store capex on new stores and remodeling 11

13 Valuation Base Case Getting to target price Methodology Metric Multiple Target Price ($/sh) 2019 EV / EBITDA $1,905MM 11.0x P / E $988MM 23.0x 59 SOTP 2019 EV / EBITDA 9.0x x 68 DCF 59 DCF + Idle cash deployment 64 Target price based on 2019 EV / EBITDA multiple, with sense check against other relative and intrinsic methodologies - EBITDA x most appropriate 1) capital structures differ significant due to different franchise vs. owned splits 2) share buyback programs differ across peers - Two-year look-ahead for normalized Pizza Hut earnings post turnaround - SOTP assumes KFC trades up to DM-based QSR multiples, while Pizza Hut trades around Chinese QSR multiples. DCF assumes 9.0% WACC and 3.0% terminal growth rate 12

14 Potential upside: unlocking value from capital structure Management hints at more productive use of cash Highly cash generative business -> significant cash build without dividend / share buybacks However, management has announced intent to pursue strategic acquisitions funded by internal cash flows, in addition to share buyback While dividend / buybacks creates no enterprise value, strategic acquisitions using idle cash can provide value upside Additional interest tax shield could result if YUMC funds buyback with debt 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - Hypothetical Cash Build without Div / Buyback Cash Balance Unlevered FCF 2,000 1,500 1, Value of Cash Deployment Free Cash Flow ,143 Commit. on Div / Buyback (150) (150) (150) Cash to 80% Increment 20% IRR Incremental Value (US$MM) 1,637 1,876 Incremental Share Price $ 4.26 $ 4.88 Share Price Impact 2018 EV / EBITDA % Post-Div/Buyback Free Cash Flow Deloyed $ % 20.0% 30.0% 40.0% 50.0% 5.0% % IRR on 15.0% Cash 20.0% Deployed 25.0% % % Source: company information 13

15 Risk and Mitigants Risk Mitigants 1. Food safety and supplier risk 1. YUMC added more quality control experts and reduce number of supplier to reduce the food quality issues 2. Labor and food cost inflation 2. High digital adoption and long-term supplier contract mitigates significant cost hikes. YUMC continues to upsell with menu upgrades and premium concept store roll-outs. 3. Customers shift to new healthier food 3. K Pro and Ph+ model are new concept stores providing high-end healthier food 4. Persistent foreign exchange headwinds 4. Macroeconomic stability top priority of current administration, committed to stem persistent capital outflow 14

16 APPENDIX 15

17 Income Statement Income Statement Fiscal Year Quarter Company Sale 1,257 1,563 1,998 2,103 1,391 1,748 2,251 2,374 1,587 2,014 2,614 2,761 6,622 6,921 7,764 8,976 % Growth (1.6%) 0.3% 8.1% 8.5% 10.7% 11.8% 12.7% 12.9% 14.1% 15.3% 16.1% 16.3% (2.5%) 4.5% 12.2% 15.6% Total Restaurant Costs (968) (1,324) (1,600) (1,764) (1,106) (1,424) (1,767) (1,959) (1,239) (1,605) (2,006) (2,223) (5,610) (5,656) (6,257) (7,074) Food and Paper (345) (453) (575) (610) (401) (501) (645) (688) (458) (578) (750) (800) (1,919) (1,983) (2,236) (2,585) Payroll and Employee Benefits (257) (358) (403) (511) (280) (390) (439) (558) (306) (426) (479) (608) (1,432) (1,529) (1,668) (1,819) Occupancy and Other Operating Expens (366) (513) (622) (644) (425) (532) (683) (714) (476) (602) (777) (815) (2,259) (2,145) (2,354) (2,670) Restaurant Profit ,012 1,264 1,507 1,902 % Restaurant Margin 23.0% 15.3% 19.9% 16.1% 20.5% 18.5% 21.5% 17.5% 21.9% 20.3% 23.2% 19.5% 15.3% 18.3% 19.4% 21.2% Franchise Income Total Operating Costs (62) (127) (121) (154) (99) (121) (156) (172) (112) (140) (182) (197) (502) (464) (548) (631) Franchise Expense (13) (15) (20) (23) (15) (18) (24) (26) (18) (21) (27) (30) (71) (71) (84) (96) General and Administrative Expenses (67) (107) (120) (133) (86) (105) (135) (147) (97) (120) (156) (169) (424) (427) (472) (542) Other Income/expense, net Refranchising Gain, Net Closures and Impairment Expenses, Net - (17) (3) (11) (11) (11) (11) (11) (11) (11) (11) (11) (78) (31) (44) (44) Operating Profit ,117 1,455 % Operating Margin 19.8% 9.0% 15.6% 10.6% 15.2% 13.3% 16.2% 12.0% 16.6% 15.1% 17.9% 14.1% 9.5% 13.3% 14.1% 15.9% Interest Income, Net Change in Fair Value of Financial Instrumen Profit before Tax ,117 1,455 Provision for Income Tax (76) (35) (102) (66) (63) (69) (108) (85) (78) (90) (139) (115) (158) (279) (324) (422) % Effective Tax Rate (29.7%) (23.6%) (31.6%) (29.0%) (29.0%) (29.0%) (29.0%) (29.0%) (29.0%) (29.0%) (29.0%) (29.0%) (23.5%) (29.2%) (29.0%) (29.0%) Minority Interest (After Tax) Net Income (Loss) % Net Margin 13.6% 6.7% 10.4% 7.2% 10.3% 9.0% 11.0% 8.2% 11.3% 10.2% 12.2% 9.6% 7.4% 9.2% 9.6% 10.8% Total Revenue 1,284 1,594 2,038 2,146 1,421 1,782 2,296 2,423 1,621 2,054 2,667 2,818 6,752 7,062 7,922 9,160 % Growth (1.5%) 0.4% 8.2% 8.5% 10.7% 11.8% 12.7% 12.9% 14.1% 15.3% 16.1% 16.3% (2.3%) 4.6% 12.2% 15.6% EBITDA ,129 1,331 1,555 1,905 % EBITDA Margin 24.8% 16.1% 20.9% 15.5% 23.0% 19.5% 20.9% 16.5% 23.7% 20.6% 22.1% 18.0% 16.7% 18.8% 19.6% 20.8% 16

18 Balance Sheet and Cash Flow Statement Balance Sheet Fiscal Year Quarter Current Assets Cash and Cash Equivalents 1, ,477 1,557 1,418 1,763 2,166 2,336 2,207 2,620 3,115 3, ,557 2,336 3,356 Short-term Investments Accounts Receivable, Net Inventories Prepaid Expenses and Other Current Ass Total Current Assets 1,722 1,692 2,054 2,236 1,897 2,340 2,883 3,090 2,740 3,271 3,933 4,219 1,426 2,236 3,090 4,219 Non Current Assets Property, Plant and Equipment, Net 1,627 1,617 1,652 1,775 1,755 1,718 1,697 1,832 1,811 1,773 1,751 1,898 1,647 1,775 1,832 1,898 Investment in Unconsolidated Affiliate Deferred Income Taxes Goodw ill Intangible Assets, Net Other Assets Total Assets 3,977 4,021 4,460 4,766 4,406 4,812 5,334 5,676 5,306 5,798 6,438 6,871 3,727 4,766 5,676 6,871 Current Liabilities Accounts Payable and Other Current Liab ,120 1, ,038 1,288 1, ,170 1,462 1, ,286 1,428 1,620 Income Taxes Payable Total Current Liabilities 1,068 1,002 1,212 1, ,102 1,371 1, ,244 1,558 1,722 1,004 1,363 1,515 1,722 Non Current Liabilities Capital Lease Obligations Minority Interest Redeemable Noncontrolling Interests Other Liabilities and Deferred Credits Total Shareholders Equity 2,580 2,669 2,871 3,025 3,172 3,333 3,586 3,784 3,967 4,177 4,502 4,772 2,377 3,025 3,784 4,772 Total Liabilities & Shareholders Equity 3,977 4,021 4,460 4,766 4,406 4,812 5,334 5,676 5,306 5,798 6,438 6,871 3,727 4,766 5,676 6,871 Cash Flow Statements Net Income D&A Increase in NWC 58 (88) (306) (333) (32) Cash Flow from Operations 297 (59) (46) ,229 1,493 Capex (74) (103) (85) (217) (80) (63) (76) (231) (83) (64) (79) (246) (436) (479) (450) (472) Net Change in Cash 80 (139) (129) ,020 17

19 DCF Output Base Case WACC 9.0% Terminal Grow th Rate 3.0% Free Cash Flow Revenue 7,922 9,160 10,637 12,064 13,254 EBITDA 1,555 1,905 2,174 2,442 2,667 EBIT 1,161 1,499 1,768 2,021 2,218 NOPAT 824 1,064 1,255 1,435 1,575 (+): D&A (-): Capex (450) (472) (532) (603) (663) (-): Increase in Net Working C Free Cash Flow 844 1,096 1,228 1,351 1,460 Discounted FCF Terminal Value 25,058 Gordon Grow th Method: Sum DCF ,752 PV Terminal Value 16,286 Enterprise Value 21,038 (+): Net Cash 1,477 Equity Value 22,515 Im plied Share Price 58.6 Implied 2018 EV / EBITDA 14.5x 18

20 Comparable Company Analysis Discount to global QSR brands on lower margin Yum trades in-line with Chinese QSR peers and at a discount to QSR with predominantly US operations Price 52 Week Market Enterprise EV / EBITDA P / E ROE Net Margin Com pany Lcl Low High Cap Value LTM LTM Yum China ,055 14, x 10.2x 25.4x 22.7x 23.4% 7.4% Chinese QSR Com panies Café de Coral ,786 1, x 11.6x 23.1x 22.5x 14.3% 6.4% Xiabu Xiabu ,669 1, x 10.6x 20.4x 17.5x 23.4% 13.3% Mean 11.8x 11.1x 21.7x 20.0x 18.9% 9.9% Median 11.8x 11.1x 21.7x 20.0x 18.9% 9.9% Asian QSR Com panies Gourmet Master ,945 1, x 9.5x 23.2x 19.0x 21.5% 7.9% Yoshinoya 1, , , ,078 1, x 11.4x 51.5x 47.5x 2.2% 0.7% McDonald's Japan 4, , , ,663 5,701 #N/A #N/A 27.3x 34.6x 4.9% 2.4% Mean 11.8x 10.4x 37.4x 33.2x 11.8% 4.3% Median 11.8x 10.4x 37.4x 33.2x 11.8% 4.3% Global QSR McDonald's , , x 14.4x 23.6x 21.8x 191.9% 19.0% Yum Brands ,821 35, x 16.5x 25.1x 21.2x #N/A 15.6% Domino's Pizza ,580 9, x 13.4x 25.2x 21.4x #N/A 8.7% Mean 15.8x 14.8x 24.6x 21.5x #N/A 14.4% Median 16.0x 14.9x 25.0x 21.4x #N/A 12.9% Source: FactSet 19

21 Forward EV / EBITDA Multiple Evolution Over the Last Twelve Months 17.00x 15.00x 13.00x 11.00x 9.00x 7.00x 5.00x 3.00x Yum China Holdings, Inc. (NYSE:YUMC) - TEV/Forward EBITDA Café de Coral Holdings Limited (SEHK:341) - TEV/Forward EBITDA Xiabuxiabu Catering Management (China) Holdings Co., Ltd. (SEHK:520) - TEV/Forward EBITDA Tsui Wah Holdings Limited (SEHK:1314) - TEV/Forward EBITDA Source: Capital IQ 20

22 Peer Benchmarking Cost leader with high returns Source: Company Information 21

23 Chinese QSR tends to be more self-owned than franchised Concern on food safety, capital market efficiency Source: broker research 22

24 Share Price Evolution Over the Last Twelve Months Source: tmall.com 23

team means KFC can enforce stricter control on food quality, turnaround time, and customer satisfaction, all of which

strategically locating new stores in new cities Consumers value food safety in delivery Delivery important to company

25 Case Study: Digital + Delivery reinforce brand equity Direct model owned stores, owned delivery fleet - Unlike other western QSR brand, KFC delivers 100% with own fleet, all while maintaining lower labor costs due to optimal - Dedicated team means KFC can enforce stricter control on food quality, turnaround time, and customer satisfaction, all of which rank highly on delivery preferences - Also helps collect big data on consumer preference, giving KFC an edge in strategically locating new stores in new cities Consumers value food safety in delivery Delivery important to company sale Own fleet: maximal control over quality KFC has superb control on labor costs Source: company information, broker research 24

Case Study: Digital enables new growth area Fast food bento on high-speed rail City rail transit: number of stations - In July 2017, China Railway High-speed began allowing

Only approved brands will be allowed to list their products on the website and app, and will be subject to food safety supervision by railway authorities - KFC also has

26 Case Study: Digital enables new growth area Fast food bento on high-speed rail City rail transit: number of stations - In July 2017, China Railway High-speed began allowing passengers to pre-book meals online from select external food vendors. Only approved brands will be allowed to list their products on the website and app, and will be subject to food safety supervision by railway authorities - KFC also has physical stores in 250 high-traffic transport hubs (20 high-speed rail stations) with plans for expansion - Brand new growth area with HSR becoming dominant mode of transportation and limited # of competitors Building more high speed trail stations Source: China Railway Corp, broker research 25

T-mall and Ant Financial (Alibaba s ecommerce & Financial Arms) Partner with T-mall (the only chain store one T-mall) to drive gift card and cashless payment service$460 million into Yum China.

27 T-mall and Ant Financial (Alibaba s ecommerce & Financial Arms) Partner with T-mall (the only chain store one T-mall) to drive gift card and cashless payment service$460 million into Yum China. Mobile payment represented 45% of our company sales with other cashless payment as another 15% of sales (Gift card). Cashless payment reached a record of $1.2 billion in Q3, which is more than 60% of our company s sales I believe, China is the leader in the world in cashless sales and our company is one of the leaders in China. Ant Financial Services Group is an online payment services provider. Its platform, Alipay, is the world's largest mobile and online payments platform. Ant Financial, alongside key Alibaba investor Primavera Capital, is investing a total of $460 million in Yum China. KFC partner with Alibaba and open store in T-mall (B2C platform) Source: tmall.com 26

Management Team Experienced local management team; stock price outperform Ms.

She has served as the President and Chief Operating Officer of Yum China since February 2017. She served as Chief Executive Officer, KFC from October 2016 to February 2017, a position she held at Yum!

Restaurants China in September 2014 as President of KFC China and was promoted to Chief Executive Officer for KFC China in August 2015. Mr. Johnson Huang is the General Manager - KFC of the Company.

28 Management Team Experienced local management team; stock price outperform Ms. Joey Wat is re-designated as President, Chief Executive Officer, Chief Operating Officer, Director of the Company effective March 1, She has served as the President and Chief Operating Officer of Yum China since February She served as Chief Executive Officer, KFC from October 2016 to February 2017, a position she held at Yum! Restaurants China from August 2015 to October Ms. Wat joined Yum! Restaurants China in September 2014 as President of KFC China and was promoted to Chief Executive Officer for KFC China in August Mr. Johnson Huang is the General Manager - KFC of the Company. Mr. Huang served as the Chief Information and Marketing Support Officer of the Company from October 2016 to February 2017, a position he held at Yum! Restaurants China from December 2014 to October Mr. Huang joined YUM in 2006 to lead the information technology department in China, and was named Chief Information Officer in He became our Chief Information and Marketing Support Officer in 2014 and assumed oversight of a spectrum of functions including IT, Digital, DSC, Marketing Shared Services and Engineering. He has been the key architect of Yum! Restaurants China s digital strategy and information technology roadmap in China. Mr. Peter Kao is the General Manager - Pizza Hut Casual Dining of the Company. He has served as the General Manager, Pizza Hut Casual Dining since March He served as Chief Executive Officer, Pizza Hut Casual Dining from October 2016 to March 2017, a position he held at Yum! Restaurants China from August 2015 to October Mr. Kao previously served in the position of Senior Vice President & Brand General Manager of Pizza Hut for Yum! Restaurants China starting in 2013 and began leading both Pizza Hut Casual Dining and Pizza Hut Home Service as Brand General Manager in Mr. Kao has had several leadership positions at YUM, responsible for both Pizza Hut Casual Dining and Pizza Hut Home Service, since Source: company information, FactSet YUMC outperform S&P 500 and S&P 500 Restaurant since spin-off 27

29 SSSg volatility due to one-off events Food quality scandal in 2012 and 2014 A 2014 food safety scandal in China did major damage to the reputations of fast food giants McDonald's and KFC. Yum immediately terminated its global relationship with OSI, which was not a major supplier to the company. After an undercover local TV report that alleged workers at Shanghai Husi Food Co Ltd used expired meat and doctored food production dates, regulators closed the factory on July 20. The plant is part of OSI Group LLC [OSIGP.UL], a U.S. food supplier. OSI, which has close to 60 manufacturing facilities worldwide and had revenue of more than $5 billion in 2012, has been supplying McDonald s in China since 1992 and KFC and Pizza Hut parent Yum since 2008, according to its website. - Reuters Since then, YUMC developed comprehensive process to prevent future food scandals and tightened the supplier selection. YUMC s heavily impacted by food safety incident and US-Sino relationship Source: company information 28

30 YUM and YUMC - Company History As of end of 2016, *WCDR - Western Casual Dining Restaurant Source: company information 29

31 Pizza Hut - Concept stores (PH+) and remodel current stores Pizza Hut's First Robot Restaurant (PH+) Opened in Shanghai Source: company information 30

32 KFC - K PRO Healthy Eating Concept YUMC announced on Sep 1, 2017 that it has launched a new restaurant KPRO in Hangzhou, China. - Integration of Alipay's new "Smile to Pay" facial recognition payment solution - Offer a fresh, seasonal menu to a new generation of sophisticated diners Source: company information 31

33 Chinese yuan strength against the U.S. dollar 1Yr - CNY to USD Chart 32

Page 1/12. Yum China Reports Fourth Quarter and Full Year 2017 Results. February 7, :30 PM ET

Page 1/12. Yum China Reports Fourth Quarter and Full Year 2017 Results. February 7, :30 PM ET Yum China Reports Fourth Quarter and Full Year 2017 Results February 7, 2018 4:30 PM ET SHANGHAI, Feb. 7, 2018 /PRNewswire/ -- (the "Company" or "Yum China") (NYSE: YUMC) today reported unaudited results