Overview - The demand for natural and healthy beverages, such as chrysanthemum tea, is increasing due to rising health awareness among consumers. Chrysanthemum tea is known for its benefits like detoxification and liver health, aligning with current consumer preferences for health-oriented drinks. The market for chrysanthemum tea beverages in China is projected to reach 2.337 billion yuan in 2024, with a year-on-year growth of 16.84%. However, chrysanthemum tea currently holds a small share of the overall tea beverage market, indicating significant future growth potential [1][13]. Market Policies - The Chinese government has implemented various policies to support the development of the food and beverage industry, including chrysanthemum tea beverages. Key policies include the "Food Business License and Filing Management Measures," "Measures for Accelerating the Integration of Domestic and Foreign Trade," and "Food Safety Risk Control List," which create a favorable regulatory environment for the industry [4][6]. Industry Chain - The chrysanthemum tea beverage industry consists of an upstream supply chain that includes chrysanthemum, water, sweeteners, acidifiers, flavorings, and packaging materials. The midstream involves production companies, while the downstream includes sales channels such as supermarkets, convenience stores, and e-commerce platforms. The consumer base is broad, particularly appealing to health-conscious individuals [7][11]. Current Development - The market for chrysanthemum tea beverages is expanding rapidly, driven by increasing consumer health awareness. The industry is expected to grow significantly, with the market size projected to reach 2.337 billion yuan in 2024, reflecting a 16.84% increase from the previous year. Despite this growth, chrysanthemum tea's share of the overall tea beverage market remains relatively small, suggesting ample room for expansion [13][21]. Competitive Landscape - The chrysanthemum tea beverage market in China is characterized by high concentration, with leading companies like China Resources Beverage, Shenhui, Vitasoy, and Huierkang holding significant market shares. Competition is intense, with both established and emerging brands engaging in price wars, new product launches, and aggressive marketing strategies. Notably, brands like Yuanqi Forest have rapidly gained market share since entering the sector in 2022 [15][17]. Industry Representative Companies - China Resources Beverage is a state-owned enterprise and a major player in the ready-to-drink beverage sector, with projected revenues of 13.52 billion yuan and a gross profit of 6.397 billion yuan in 2024, reflecting a gross margin of 47.31% [17]. Shenhui is a mid-sized beverage company that combines traditional methods with modern technology to produce its chrysanthemum tea products [19]. Future Trends - The future of the chrysanthemum tea beverage market is expected to focus on low-sugar and no-sugar options, with companies likely to use natural sweeteners like stevia and monk fruit extract. Additionally, there will be an emphasis on enhancing the health benefits of products, potentially incorporating ingredients like vitamin C and probiotics to provide consumers with comprehensive health benefits [21].

Core Viewpoint - China Resources Beverage has issued a profit warning, expecting a 20% to 30% year-on-year decline in net profit for the first half of 2025, leading to a significant drop in stock price following the announcement [2][3] Financial Performance - The company reported a revenue of 12.124 billion RMB from packaged drinking water in 2024, a decrease of 2.6% compared to 2023, with its revenue share dropping from 92.1% to 89.7% [8] - The beverage segment generated 1.397 billion RMB in revenue in 2024, marking a 30.8% increase, but still only accounted for 10.3% of total revenue [9] Marketing and Strategy - Increased marketing expenditures have led to a higher marketing expense ratio, which has negatively impacted profits. The company has engaged in high-profile marketing strategies, including partnerships with sports events and athletes [3][5] - The company is undergoing channel reforms, shifting from traditional distribution to a more integrated approach, which includes introducing e-commerce and specialized distributors [5][6] Industry Context - The bottled water market in China is experiencing stagnation, with the production volume in 2024 falling below 50% of total beverage production for the first time [7] - Competitors like Nongfu Spring are gaining market share, with their tea beverage segment surpassing bottled water as the primary revenue source [10] Challenges and Future Outlook - The company faces significant challenges in its transformation from a bottled water leader to a diversified beverage group, including competition from established brands and the need for product innovation [11][15] - There is a pressing need for the company to enhance its digital and channel strategies to improve market penetration, especially in lower-tier markets [14]

Core Viewpoint - China Resources Beverage (华润饮料) has issued a profit warning, expecting a net profit decrease of approximately 20% to 30% for the six months ending June 30, 2025, compared to the same period in 2024 [1] Group 1: Financial Performance - The company's stock price fell significantly, with a maximum intraday drop of over 14% on July 28, closing down 13.08% [2] - For the first half of 2024, revenue was approximately 13.52 billion RMB, a slight increase of 0.05% year-on-year, while net profit was 1.66 billion RMB, reflecting a year-on-year growth of 24.7% [9][10] - The revenue from packaged drinking water in 2024 was 12.12 billion RMB, a decline of 2.6% compared to 2023, accounting for 89.7% of total revenue [10][11] Group 2: Market Competition - The increase in marketing resources and adjustments in product mix have led to a temporary impact on profit performance, with intensified competition in the packaged water industry raising sales and distribution costs [2][9] - The competitive landscape has become more challenging, with competitors like Nongfu Spring launching lower-priced products, leading to a price war in the bottled water market [13] - The company's reliance on packaged drinking water is significant, with its revenue share from this segment decreasing from 95.4% in 2021 to 89.7% in 2024, indicating a need for strategic adjustments [11][13] Group 3: Analyst Ratings and Market Response - UBS has set a target price of 18.03 HKD for China Resources Beverage, maintaining a "Buy" rating despite the profit warning [8] - Conversely, Goldman Sachs downgraded its rating from "Buy" to "Neutral," reducing the target price from 16.4 HKD to 12.1 HKD, and lowered sales forecasts by about 5% and profit forecasts by 26% to 27% for 2025 to 2027 [8]

降本增效持续推进，下半年经营恢复仍取决于市场竞争动态。公司上半年持续推进降本增效动作，我们 预计年内自产产能比例有望提升至60%，其他生产端降本工作如自主铸胚、数字化管理、采购方案优 化、物流优化（增加铁路和水路运输）等持续推进，部分抵消市场竞争带来的不利影响。公司下半年将 根据市场竞争灵活调整投放策略，提升费用使用效率。我们预计随近期部分友商舆论事件发酵等，利好 行业渗透率提升及公司收入恢复，同时从销售结构看公司1H24 为较高基数，我们预计2H25 随基数降 低，公司收入端和利润率端表现有望改善。 公司发布盈警公告，1H25 净利润同比降低20-30%，大幅低于市场预期，主因公司上半年战略加大营销 资源投入、产品组合调整以及渠道调整影响。 关注要点 应对市场竞争加剧战略性加大营销促销力度。1H25 饮料行业竞争加剧，公司观察到包装水行业有所下 滑，市场产品价格折扣力度较大，均价有所下行，为了应对市场竞争，公司战略性增加经销商补贴与投 入，改善经销商盈利，给予经销商更大自主权应对区域市场竞争，公司终端份额基本稳定，但促销费用 对收入端、成本端及费用率均有负面影响。根据中金现代渠道数据，怡宝1-5 月现代渠道 ...

高盛表示仍看好华润饮料的区域饮料业务扩张及渗透潜力，相信生产效率提升将推动包装水业务利润重 拾扩张，但由于销售及渠道调整需时见效，将投资评级由"买入"下调至"中性"，目标价由16.4港元降至 12.1港元。高盛将华润饮料2025至2027年销售预测下调约5%，以包装饮用水销售预期下调约6%，估计 促销及渠道投资增将导致2025年毛利率收窄1.6个百分点，相应将盈利预测下调26%至27%。 高盛发表研究报告指，华润饮料日前发盈警，预料上半年盈利将按年下跌20%至30%，主要由于市场营 销投入增加、产品组合调整及渠道改革，公司预期下半年将维持营销及渠道投资力度，从而在持续激烈 的竞争环境中维持稳定市场份额。 ...

Group 1 - The company expects a net profit decline of 20% to 30% in the first half of 2025 compared to 2024 due to increased marketing investments and product adjustments [1] - The company is strategically increasing marketing resources and adjusting product mix to support long-term development, which is impacting short-term profitability [1] - The company is implementing cost control measures and optimizing operations to mitigate negative impacts on profitability [1] Group 2 - The company is a leader in the purified water industry, focusing on channel cultivation, network expansion, and targeting new channels such as dining and households [2] - The company is developing its second sub-brand, focusing on natural and mineral water, with an expected recovery in packaged water market share [2] - The company aims to enhance its net profit margin through increased self-production and reduced outsourcing costs, benefiting from cost reductions in PET and sugar [2] Group 3 - The board anticipates declaring a mid-term dividend by mid-2025, reflecting a commitment to shareholder returns and a sustainable financial position [2] - The company is expected to face short-term pressure due to intensified competition in the packaged water and beverage sectors, alongside channel reforms [3] - Long-term profit growth is anticipated as the company continues to focus on beverage business development and improves profit margins through increased self-production [3]

Core Viewpoint - China Resources Beverage (2460.HK) issued a profit warning, expecting a 20%-30% decline in net profit for the first half of the year, which is below market expectations for double-digit growth [1] Group 1: Company Performance - The company's stock price dropped over 14% to HKD 11.16, marking a new low in over five months, with trading volume increasing to HKD 960 million [1] - The decline in net profit is attributed to intensified competition in the packaged water industry, leading to higher sales and distribution expenses, as well as changes in product mix resulting in lower gross margins [1] Group 2: Analyst Opinions - Goldman Sachs remains optimistic about the regional beverage business expansion and penetration potential of China Resources Beverage, but downgraded the investment rating from "Buy" to "Neutral" and reduced the target price from HKD 16.4 to HKD 12.1 [1] - Goldman Sachs adjusted sales forecasts for 2025 to 2027 down by approximately 5%, with a 6% reduction in packaged drinking water sales expectations, estimating a 1.6 percentage point narrowing in gross margin due to increased promotional and channel investment, leading to a 26%-27% downward revision in profit forecasts [1] - UBS anticipates that the profit warning will negatively impact the overall beverage industry and noted that the management did not provide specific guidance, with expectations of continued competitive uncertainty in the second half of the year [2] Group 3: Future Outlook - UBS highlighted that China Resources Beverage plans to distribute an interim dividend, despite the negative market reaction to the profit warning [2] - The management reiterated a focus on deepening channel reforms, particularly in online, home, and dining channels [2]

Investment Rating - The report downgrades the investment rating to "Accumulate" from "Buy" due to short-term performance pressure [3][6]. Core Views - The company is expected to see a net profit decline of 20% to 30% in the first half of 2025 compared to 2024, primarily due to increased marketing investments and product adjustments aimed at long-term growth [1]. - Despite short-term challenges, the company maintains a strong position in the pure water industry and is focusing on expanding its market presence in the restaurant and household segments [2]. - The company is actively working on enhancing its product portfolio, particularly in the beverage sector, with a focus on high-potential products [2]. - The net profit margin is expected to improve due to a higher proportion of self-produced products and reduced outsourcing costs, alongside cost benefits from raw materials [2]. Summary by Sections Financial Performance - For 2025, the company anticipates a revenue of 12,778 million RMB, a decrease of 5.5% year-on-year, with net profit expected to be 1,299 million RMB, reflecting a decline of 20.6% [5][10]. - The earnings per share (EPS) for 2025 is projected at 0.54 RMB, down from 0.68 RMB in 2024 [5][10]. Market Strategy - The company is focusing on channel refinement and market expansion, particularly in the food and beverage sectors, to drive growth [2][3]. - The introduction of new products under the "Ben You" series is aimed at capturing market share in the natural and mineral water segments [2]. Shareholder Returns - The board is committed to providing sustainable returns to shareholders, with plans to declare interim dividends based on a solid financial position and retained earnings [2].

Group 1 - The company is a leading player in the domestic packaged drinking water industry, becoming the second-largest packaged drinking water and the largest pure water enterprise in China, with its core brand "Yibao" maintaining a significant market share [1] - The company is transitioning from a single product focus to a multi-product platform, which is expected to drive future growth [1] - The revenue from the company's large and medium-sized bottled water segment is projected to reach 12.12 billion yuan in 2024, accounting for 34.1% of total revenue, with a CAGR of 9.9% from 2021 to 2024 [1] Group 2 - The company is expanding its production capacity to support its national strategy, with new factories and production lines established in key regions, which will enhance overall capacity and reduce supply bottlenecks [2] - The company is increasing its self-built production capacity, reducing reliance on outsourcing, and optimizing its supply chain to lower packaging material costs, leading to an expected gross margin improvement of approximately 2.6 percentage points to 47.3% in 2024 [2] Group 3 - The company has a strong channel network and sales team, covering over two million retail outlets across the country, with a retail terminal coverage rate increasing from 50.6% in 2021 to 77.2% in 2024 [3] - The company has achieved significant growth in e-commerce channels and lower-tier markets, with coverage in third-tier cities and below rising from 51.2% to 57.2% from 2021 to 2024 [3] Group 4 - Revenue projections for the company are 14.54 billion yuan in 2025, 15.52 billion yuan in 2026, and 16.54 billion yuan in 2027, with expected growth rates of 7.5%, 6.7%, and 6.6% respectively [4] - The company is expected to achieve net profits of 1.99 billion yuan in 2025, 2.23 billion yuan in 2026, and 2.52 billion yuan in 2027, with corresponding EPS growth of 21.5%, 14.5%, and 10.9% [4]

Investment Rating - The report initiates coverage with an OUTPERFORM rating, targeting a price of HK$18.10, representing a potential upside of 38% from the current price of HK$13.10 [2]. Core Insights - China Resources Beverage is a leading player in the packaged drinking water industry, holding the position of the second-largest packaged drinking water company and the largest in pure drinking water in China. The core brand "Yibao" has maintained a leading market share, contributing approximately 90% to the company's revenue [3][8]. - The company is transitioning from a single product focus to a multi-product platform, with significant growth expected in the beverage segment, which currently accounts for about 10% of total revenue but shows promising growth potential [3][30]. - The company has been expanding its production capacity and optimizing its supply chain, which is expected to improve gross margins. The gross profit margin is projected to increase to 47.3% in 2024, up from 44.7% in 2023 [4][36]. Revenue and Profit Forecast - Revenue is expected to grow from RMB 14.54 billion in 2025 to RMB 16.54 billion in 2027, with year-on-year growth rates of 7.5%, 6.7%, and 6.6% respectively. Net profit is projected to increase from RMB 1.99 billion in 2025 to RMB 2.52 billion in 2027, with corresponding EPS of RMB 0.83, RMB 0.95, and RMB 1.05 [2][5]. Market Position and Growth Drivers - The company has a strong channel network, covering over 2 million retail outlets across China, with a significant increase in retail coverage from 50.6% in 2021 to 77.2% in 2024. The company is also focusing on expanding its presence in lower-tier cities and e-commerce platforms [5][44]. - The growth of large-sized bottled water products has outpaced the industry, with a CAGR of 9.9% from 2021 to 2024, making it a key growth driver for the company [3][31]. Cost Management and Margin Improvement - The company has been optimizing its cost structure, with a focus on increasing self-built production capacity to reduce reliance on outsourcing. This strategy is expected to enhance cost control and product quality consistency [4][48]. - The gross margin has improved due to a decrease in raw material costs, particularly PET, which is projected to stabilize in the future [36][37]. Strategic Expansion - The company is actively expanding its production facilities in key regions, including Guangdong and Fujian, to enhance its national coverage and eliminate supply bottlenecks [4][48]. - The strategic focus on sports marketing and partnerships with major events is expected to enhance brand visibility and consumer engagement, further driving growth [46][47].