证券研究报告 港股公司|公司点评|农夫山泉（09633） 2024 年半年报点评： 收入利润符合预期，即饮茶带动高增 glzqdatemark1 证券研究报告 |报告要点 我们预计公司 2024-2026 年营业收入分别为 460.79/521.23/578.55 亿元，同比增速分别为 8.00%/13.12%/11.00%，归母净利润分别为 114.08/131.50/146.24 亿元，同比增速分别为 2.26%/15.27%/11.21%，对应三年 CAGR 为 9.44%，对应 2024-2026 年 PE30/26/23X。考虑到公 司渠道管理精细化、供应链效率高，看好公司中期维度市占率提升和饮料全品类布局带动增 长，维持"买入"评级。 |分析师及联系人 邓周贵 徐锡联 刘景瑜 吴雪枫 SAC：S0590524040005 SAC：S0590524040004 SAC：S0590524030005 农夫山泉(09633) 2024 年半年报点评： 收入利润符合预期，即饮茶带动高增 | --- | --- | |-----------------------|--------------------| ...

昨天晚上半开玩笑的说，拼多多的下跌可能是因为黄老板不愿意当首富，结果今天一开盘就看见农夫山泉暴跌12%，当时我忍不住感慨，这赛道也要竞争 了吗。 话说回来中国这些年的首富基本上都有点问题，早先的黄光裕坐过牢，许家印现在还在里面，王健林和马云各有各的麻烦，然后就是卖水的钟睒睒，莫名 其妙被网暴了半年。 这些人当首富的时候中国的经济还在繁荣上行，老百姓日子过的不错也就把富豪榜当个谈资。现在经济遭遇减速，老百姓生活压力明显上升，这个时候谁 还当出头鸟就很容易架起来烤，首富头衔纯粹烫手山芋，有百害而无一利。 以上是聊闲篇的，农夫山泉的暴跌当然不是钟老板故意砸的，而是前一晚公布的财报不理想，公司最最最最核心产品包装饮用水上半年下滑18%，而这个 产品在1、2月的时候还同比增长了19%，转折点发生在2月25日宗庆后去世，之后农夫山泉就陷入了漫长的网暴，饮用水的销售也遭遇了重大挫折。 首先是火了好几天的黑悟空概念，我游戏还没通关呢，相关概念股就已经凉了，华谊兄弟一个星期从2.96跌到1.96，浙报传媒五个交易日从10.5跌到7.8。 当时还有很多人说山西旅游会被带火，但是山西高速最近3个交易日从6.2跌到4.4。 前晚广泛 ...

Investment Rating - Maintain "Recommend" rating with a target price of HKD 36.0 [1][2] Core Views - The company achieved H1 2024 revenue of RMB 22.17 billion, up 8.4% YoY, and net profit of RMB 6.24 billion, up 8.0% YoY [1] - Packaged water revenue declined by 18.3% YoY to RMB 8.53 billion due to a public opinion incident, while beverage revenue grew 36.1% YoY to RMB 13.64 billion [1] - Ready-to-drink tea segment maintained a high growth rate of 59.5% YoY, driven by the success of the Dongfang Leaf and Teaπ brands [1] - Gross margin decreased by 1.38 percentage points to 58.8% due to increased competition in packaged water and rising raw material costs for juice [1] - Net profit margin remained stable at 28.1% YoY, supported by optimized expense ratios [1] Financial Performance - H1 2024 operating income: RMB 22.17 billion (+8.4% YoY) [1] - H1 2024 net profit: RMB 6.24 billion (+8.0% YoY) [1] - Packaged water revenue: RMB 8.53 billion (-18.3% YoY) [1] - Beverage revenue: RMB 13.64 billion (+36.1% YoY) [1] - Ready-to-drink tea revenue: RMB 8.43 billion (+59.5% YoY) [1] - Functional beverage revenue: RMB 2.55 billion (+3.8% YoY) [1] - Juice revenue: RMB 2.11 billion (+25.4% YoY) [1] Product Strategy - The company launched green-bottled purified water to stabilize market share and expand into the purified water market [2] - Dongfang Leaf continued to lead in the ready-to-drink tea segment with a 900ml product matrix [1] - Nongfu Orchard upgraded its products to align with health trends, and ShuRongC introduced new blood orange flavors [1] Market Outlook - Short-term pressure on packaged water is expected to continue due to promotional activities for green-bottled water [2] - Long-term growth potential remains strong in the packaged water and ready-to-drink tea segments [2] - The company's ability to innovate and launch new products continues to be validated [2] Financial Forecasts - 2024E revenue: RMB 44.72 billion (+4.8% YoY) [3] - 2024E net profit: RMB 12.52 billion (+3.6% YoY) [3] - 2025E revenue: RMB 51.11 billion (+14.3% YoY) [3] - 2025E net profit: RMB 14.36 billion (+14.7% YoY) [3] - 2026E revenue: RMB 57.73 billion (+13.0% YoY) [3] - 2026E net profit: RMB 16.27 billion (+13.3% YoY) [3]

Financial Performance - Total revenue for the six months ended June 30, 2024, was RMB 22,173 million, an increase of 8.4% year-on-year[2]. - Profit attributable to equity holders of the parent company was approximately RMB 6,240 million, reflecting an 8.0% year-on-year growth[2]. - Basic earnings per share increased to RMB 0.55, up 8.0% compared to RMB 0.51 in the same period last year[2]. - Gross profit for the period was RMB 12,309 million, with a gross margin improvement noted[2]. - The company recorded a net profit before tax of RMB 8,142 million, compared to RMB 7,524 million in the previous year[2]. - The total comprehensive income attributable to equity holders for the period was RMB 6,240 million, compared to RMB 5,776 million in the previous year[3]. - The adjusted profit before tax for the group was RMB 8,142,315 thousand for the six months ended June 30, 2024, compared to RMB 7,524,304 thousand for the same period in 2023, indicating an increase of about 8.2%[11]. - The group’s total segment profit for the six months ended June 30, 2024, was RMB 8,168,756 thousand, compared to RMB 7,723,684 thousand for the same period in 2023, reflecting a growth of approximately 5.8%[11]. - Profit for the period increased by 8.0% to RMB 6,240 million, compared to RMB 5,775 million in the same period last year[47]. Revenue Breakdown - The group generated over 99% of its revenue and operating profit from customers in mainland China, with over 99% of identifiable assets and liabilities also located in mainland China[12]. - The group operates five reportable segments: water products, ready-to-drink tea, functional beverages, juice beverages, and other products[8]. - The revenue from packaged drinking water products decreased by 18.3% year-on-year, accounting for 38.5% of total revenue[34]. - The revenue from beverage products increased by 36.7% year-on-year, representing 61.1% of total revenue[32]. - The functional beverage product revenue increased by 59.5% year-on-year, reaching RMB 2,550 million[33]. - The juice beverage product revenue showed a slight increase of 3.8% year-on-year, totaling RMB 2,114 million[33]. - The tea beverage segment recorded revenue of RMB 8,430 million, a year-on-year increase of 59.5%, accounting for 38.0% of total revenue[37]. - The functional beverage segment achieved revenue of RMB 2,550 million, representing a 3.8% year-on-year growth, and contributed 11.5% to total revenue[38]. - The juice beverage segment generated revenue of RMB 2,114 million, with a year-on-year increase of 25.4%, making up 9.5% of total revenue[39]. - The other products segment, including soda and coffee beverages, reported revenue of RMB 548 million, a decline of 7.3% year-on-year, accounting for 2.5% of total revenue[40]. Assets and Liabilities - Non-current assets totaled RMB 32,022 million as of June 30, 2024, up from RMB 20,676 million at the end of 2023[4]. - Current liabilities increased to RMB 28,994 million, compared to RMB 19,877 million at the end of 2023[5]. - Trade receivables as of June 30, 2024, amounted to RMB 703,194,000, compared to RMB 547,021,000 at the end of 2023, representing an increase of approximately 28.5%[26]. - Trade payables as of June 30, 2024, were RMB 1,859,344,000, compared to RMB 1,770,098,000 at the end of 2023, reflecting an increase of approximately 5.0%[28]. - As of June 30, 2024, the company's long-term bank deposits, pledged deposits, cash, and bank balances totaled RMB 27,136 million, a 5.8% increase from RMB 25,639 million at the end of 2023[48]. - Inventory increased from RMB 3,092 million to RMB 3,337 million, with inventory turnover days rising from 55.0 days to 64.2 days[49]. Expenses and Costs - Employee benefits expenses amounted to RMB 1,670,326,000, with wages and salaries contributing RMB 307,258,000, compared to RMB 1,600,359,000 in the previous year[16]. - Research and development costs were RMB 93,749,000, down from RMB 127,082,000 in the prior year, indicating a decrease of approximately 26.2%[16]. - Selling and distribution expenses rose to RMB 4,971 million, a 5.9% increase from RMB 4,695 million in the previous year, accounting for 22.4% of total revenue, down from 22.9%[44]. - Administrative expenses decreased by 4.8% to RMB 913 million, representing 4.1% of total revenue, slightly down from 4.7%[45]. - Other income and gains increased by 15.4% to RMB 1,040 million, primarily due to increased interest income from fixed deposits[46]. Dividends and Shareholder Returns - The group declared a final dividend of RMB 0.75 per share, totaling RMB 8,434,850,000, which will be paid in August 2024[23]. - The company declared a final cash dividend of RMB 0.75 per share, totaling approximately RMB 8,435 million, to be distributed on August 28, 2024[48]. Corporate Governance and Compliance - The audit committee has reviewed the unaudited interim results for the six months ending June 30, 2024, confirming compliance with applicable accounting principles and sufficient disclosures[71]. - The company has adhered to all provisions of the Corporate Governance Code since January 1, 2024, except for a specific deviation regarding the separation of roles between the chairman and the CEO[72]. - The board consists of five executive directors, one non-executive director, and three independent non-executive directors, ensuring a high level of independence in management[73]. - The company has adopted the Standard Code for Securities Transactions by Directors and confirmed compliance by all directors and supervisors during the reporting period[74]. Strategic Initiatives and Future Plans - The company has signed an investment agreement with the government of Jinhua City, Zhejiang Province, with a total planned investment of RMB 5 billion for the "Nongfu Spring Jinhua Drinking Water and Beverage Comprehensive Industrial Base Project"[57]. - The company plans to use the remaining IPO proceeds for brand building, purchasing sales equipment, and constructing new production facilities, with expected completion by December 2026[67]. - The company will continue to sell forfeited shares in the open market, with proceeds used for future incentive share purchases[65]. - The company plans to gradually utilize the net proceeds from the listing by December 31, 2026, due to uncertainties in the post-pandemic economic recovery and geopolitical changes[68]. - The board believes that extending the expected time for utilizing the listing proceeds will not significantly adversely affect the existing business and operations[69]. Market and Economic Context - In the first half of 2024, the GDP of China reached RMB 61.7 trillion, growing by 5.0% year-on-year[31]. - The total retail sales of consumer goods in China amounted to RMB 23.6 trillion, reflecting a year-on-year growth of 3.7%[31]. Brand and Product Development - The group launched a new "Nongfu Spring" purified water product in April 2024, marking its return to the purified water segment after 24 years[35]. - The company launched a new 19-liter PET bottled natural water product in January 2024, enhancing customer service experience[36]. - The company introduced new flavors in its tea beverage line, including a limited edition "Longjing New Tea," which sold out rapidly[37]. - The company expanded its product offerings with the launch of "Farmer's Ice," leveraging its natural water source advantage[36]. - The company continues to focus on enhancing brand value through innovative marketing strategies and product upgrades[38]. - The company emphasized its commitment to social responsibility and sustainable practices in a recent media appearance by its founder[41]. Legal and Regulatory Matters - The group has taken legal action against malicious rumors affecting its brand and sales since late February 2024[35]. - The group has not experienced any significant events after the reporting period up to the approval date of the interim financial statements[29].

Investment Rating - The investment rating for the company is "Outperform the Market" [1][6] Core Views - The report highlights strong growth in the beverage sector, with revenue contribution from this segment increasing from 42.14% in 2017 to 52.51% in 2023, and a CAGR of 20.4% from 2017 to 2023 [4] - The beverage industry in China showed a cumulative production of 98.1 million tons in the first half of 2024, reflecting a year-on-year growth of 7.9%, indicating a favorable market environment for the company's beverage business [3][4] - The introduction of green bottle packaging for purified water is expected to enhance the company's competitiveness in the bottled water market [4] - The company has maintained a stable cost structure, with net profit margin increasing from 19.31% in 2017 to 28.15% in 2023, suggesting continued strong profitability [4] Financial Summary - The projected total revenue for the company for 2024, 2025, and 2026 is estimated at 48.065 billion, 56.586 billion, and 65.901 billion respectively, with corresponding net profits of 13.069 billion, 15.608 billion, and 18.704 billion [5] - The earnings per share (EPS) are forecasted to be 1.16, 1.39, and 1.66 yuan for the years 2024, 2025, and 2026 respectively [5] - The company’s sales net profit margin is expected to remain strong, with a gross margin of approximately 58.50% in 2024, improving to 60.00% by 2026 [5][8] Valuation - The report assigns a PE valuation range of 30-35 times for 2024E, translating to a per-share value range of 34.80 to 40.60 yuan, which corresponds to a reasonable value range of 38.67 to 45.11 HKD per share [6]

Investment Rating - The report maintains an "Outperform" rating for the company [1] Core Insights - The company reported a revenue of 42.267 billion CNY for 2023, representing a year-on-year growth of 28.4%. The net profit attributable to shareholders was 12.079 billion CNY, a 42.4% increase compared to the previous year, exceeding market expectations. A dividend of 0.75 CNY per share was proposed, with a payout ratio of 69.8% [4] - The investment rating and valuation have been adjusted upwards for 2024-2025 due to the robust growth of the product matrix and continuous improvement in product and channel strength. The forecasted net profits for 2024-2026 are 13.9 billion CNY, 16.5 billion CNY, and 19.3 billion CNY, respectively, with year-on-year growth rates of 15%, 18%, and 17% [4] - The core bottled water business is expected to continue gaining market share due to multiple driving factors, including a differentiated positioning strategy and a focus on mid-to-large size packaging. The beverage business is anticipated to grow faster than the market average due to proactive positioning in the trends of sugar-free and premium consumption [4] Financial Data and Profit Forecast - The company achieved total revenue of 42.667 billion CNY in 2023, with a projected revenue of 50.183 billion CNY in 2024, reflecting an 18% year-on-year growth. The net profit for 2023 was 12.08 billion CNY, with forecasts of 13.948 billion CNY for 2024, indicating a 15% increase [5] - The earnings per share (EPS) for 2023 was 1.07 CNY, with projections of 1.24 CNY for 2024, and the return on equity (ROE) for 2023 was 42.28% [5] - The price-to-earnings (PE) ratios for 2024-2026 are projected to be 33x, 28x, and 24x, respectively, indicating a favorable valuation trend [4][5]

Company Overview - Nongfu Spring Co., Ltd. was established in 1996 and is a leader in the packaged drinking water and beverage industry in China[3] - The company was transformed into a joint stock company in June 2001 and listed on the Hong Kong Stock Exchange in September 2020 (stock code: 9633.HK)[3] - Nongfu Spring's major products include packaged drinking water, tea beverage, functional beverage, and juice beverage[3] - The company has a nationwide sales network covering all provinces, municipalities, and prefecture-level administrative divisions across China[4] - Nongfu Spring implements a multi-brand strategy and has built a super brand in the Chinese soft beverage market[4] - The company's registered office and headquarters are located at No. 181 Geyazhuang, Xihu District, Hangzhou, Zhejiang, PRC[8] - The principal place of business in Hong Kong is Room F, 6/F, CNT Tower, 338 Hennessy Road, Wan Chai, Hong Kong[11] - The company's website is www.nongfuspring.com[9] Financial Performance - Total revenue for 2023 reached RMB 42,667 million, a 28.4% increase from 2022[31] - Net profit attributable to owners of the parent in 2023 was RMB 12,079 million, up from RMB 8,495 million in 2022[31] - Operating cash flow in 2023 increased by 43.7% year-on-year to RMB 17,305 million[31] - The company proposed a final cash dividend of RMB 0.75 per share for 2023, totaling approximately RMB 8,435 million[31] - Gross profit for 2023 was RMB 25,407 million, compared to RMB 19,095 million in 2022[29] - Total assets as of December 31, 2023, were RMB 49,137 million, up from RMB 39,255 million in 2022[29] - Cash and bank balances at the end of 2023 stood at RMB 24,125 million, a significant increase from RMB 15,211 million in 2022[29] - Earnings per share for 2023 were RMB 1.07, compared to RMB 0.76 in 2022[29] - Total equity as of December 31, 2023, was RMB 28,571 million, up from RMB 24,084 million in 2022[29] - Revenue increased by 28.4% to RMB42,667 million in 2023 compared to RMB33,239 million in 2022[73] - Gross profit rose by 33.1% to RMB25,407 million in 2023 from RMB19,095 million in 2022[73] - Gross profit margin improved by 2.1 percentage points to 59.5% in 2023[73] - Selling and distribution expenses increased by 18.7% to RMB9,284 million in 2023, accounting for 21.8% of total revenue[74] - Profit for the year surged by 42.2% to RMB12,079 million in 2023 from RMB8,495 million in 2022[84] - Long-term bank deposits, pledged deposits, cash, and bank balances increased by 32.7% to RMB25,639 million as of December 31, 2023[86] - Inventories grew by 46.7% to RMB3,092 million as of December 31, 2023, with inventory turnover days increasing to 55.0 days[88] - Trade receivables and bills increased to RMB547 million as of December 31, 2023, with turnover days decreasing to 4.4 days[89] - Trade payables and bills rose to RMB1,770 million as of December 31, 2023, with turnover days increasing to 33.8 days[90] - Capital gearing ratio increased to 11.2% as of December 31, 2023, up from 10.5% in 2022[91] - Trade and bills receivables increased from RMB479 million in 2022 to RMB547 million in 2023, with turnover days decreasing from 5.2 days to 4.4 days[93] - Trade and bills payables increased from RMB1,425 million in 2022 to RMB1,770 million in 2023, with turnover days increasing from 33.3 days to 33.8 days[94] - The gearing ratio increased from 10.5% in 2022 to 11.2% in 2023, primarily due to increased use of bills receivable financing[95] - The Group held HK$1,536 million, US$462 million, and other foreign currencies, with exchange gains of approximately RMB46 million in 2023[97] - Capital commitments amounted to approximately RMB4,437 million as of December 31, 2023, mainly for construction of production plants and purchase of production equipment[98] - The Group entered into an investment agreement for the "Nongfu Spring Jiande Drinking Water and Beverage Comprehensive Industrial Base Project" with a total investment of RMB5 billion[105] - As of December 31, 2023, the Group had utilized HK$4,900 million of the IPO proceeds, accounting for 52.26% of all raised funds, with HK$4,477 million remaining unutilized[111] - Brand building utilized HK$1,003 million of the IPO proceeds, with HK$1,341 million remaining unutilized and expected to be used by December 31, 2024[112] - Purchasing sales equipment utilized HK$371 million of the IPO proceeds, with HK$1,973 million remaining unutilized and expected to be used by December 31, 2024[112] - Purchasing production facilities and building new factories utilized HK$1,438 million of the IPO proceeds, with HK$437 million remaining unutilized and expected to be used by December 31, 2024[112] - The Group has adequate financial resources to continue its operation in the foreseeable future, prepared on a going concern basis[113][115] Product Performance - Packaged drinking water products accounted for 47.5% of total revenue, while beverage products accounted for 51.7% of total revenue in 2023[42] - Tea beverage products revenue increased to RMB12,659 million in 2023, representing 29.7% of total revenue, up from 20.8% in 2022[43] - Functional beverage products revenue was RMB4,902 million in 2023, maintaining an 11.5% share of total revenue[43] - Juice beverage products revenue was RMB3,533 million in 2023, accounting for 8.3% of total revenue[43] - Other products, including soda water and fresh fruits, contributed RMB1,311 million, representing 3.0% of total revenue in 2023[43] - The revenue from packaged drinking water products in 2023 was RMB20,262 million, a 10.9% increase compared to 2022, accounting for 47.5% of total revenue[45][46] - The tea beverage products revenue in 2023 was RMB12,659 million, an 83.3% increase compared to 2022, accounting for 29.7% of total revenue[52][53] - Functional beverage products revenue in 2023 was RMB4,902 million, a 27.7% increase compared to 2022, accounting for 11.5% of total revenue[57][58] - Juice beverage products revenue in 2023 was RMB3,533 million, a 22.7% increase compared to 2022, accounting for 8.3% of total revenue[59][60] - Other products revenue in 2023 was RMB1,311 million, a slight decrease of 3.1% compared to 2022, accounting for 3.0% of total revenue[62][63] Marketing and Branding - The company promoted high-quality water sources through advertisements and "Source-tracking" campaigns, emphasizing natural and healthy consumer perception[47][48] - During the Chinese New Year of 2023, the company launched a zodiac edition of natural mineral water and co-branded with Disney for limited edition products[49][50] - In the second half of 2023, the company upgraded the 4L "handle bottle" natural water product, focusing on ergonomic design and cooking convenience[51] - "Oriental Leaf" introduced new flavors and packaging, and launched a series of short films themed around the twenty-four solar terms to promote Chinese tea culture[54] - "Tea π" engaged in a creative label design collaboration with global illustrators and consumers, resulting in the "Tea π Yearbook 2023: Wonderful World Illustrations"[55] - "Scream" beverage collaborated with the Chinese University Basketball League to enhance its sports expertise connotation[57][58] - "Victory" vitamin water launched new prune and peach flavor and mixed pomelo flavor, and sponsored the V-Break Dance Battle[57][58] - "17.5°" juice launched seasonal fresh orange juice with a 36-hour integrated procedure from picking to bottling[59][60] - "Water Soluble C100" launched about 30,000,000 crossover editions with The Little Prince IP[61] - "TANBING" coffee launched 250ml mini-bottled coffee and exclusive jasmine tea coffee with Sam's Club[63][64] - "Big Lemon" beverages were launched in April 2023 with freshly squeezed lemon juice and retained lemon peel oil[63][64] - "Oriental Leaf" launched "Black Oolong Tea" with premium oolong tea from Northern Fujian[65][68] Corporate Governance - The company's 2022 Annual General Meeting was held on May 16, 2023, and the 2023 Annual General Meeting is scheduled for May 21, 2024[5] - H Shares were listed on the Hong Kong Stock Exchange on September 8, 2020[8] - The reporting period for the annual report is from January 1, 2023, to December 31, 2023[7] - The latest practicable date for the annual report is April 14, 2024[6] - The company renewed the Purchasing Framework Agreement with Yangshengtang on December 14, 2022[6] - The company renewed the Basic R&D and Test Service Framework Agreement with Yangshengtang and YST Natural Medicine Research on December 14, 2022[6] - The over-allotment option allows the company to issue up to 58,234,600 additional H Shares at the offer price[7] - The Board consists of nine members, including four executive directors, two non-executive directors, and three independent non-executive directors[152][154] - Mr. Zhong Shanshan serves as both Chairman and General Manager, a structure deemed beneficial for management[147][149] - The Board ensures a balance of power and authority with experienced and high-caliber individuals[150] - The Board is responsible for determining business strategies and investment plans, and implementing resolutions passed at Shareholders' general meetings[157] - The Board has established three special committees: Audit Committee, Nomination Committee, and Remuneration Committee[158] - The Company has set up the Office of Public Policy & Sustainable Development to assist in identifying and monitoring sustainable development risks[158] - The Chairman of the Board and General Manager roles are both performed by Mr. Zhong Shanshan[160] - The Board revised the Articles of Association and the Rules of Procedure during the Reporting Period[161] - The Office of Public Policy & Sustainable Development revised the Whistleblowing Policy and the Anti-Corruption Policy[161] - Mr. Zhong Shanshan, Ms. Wu Limin, Mr. Xiang Xiansong, and Ms. Han Linyou were elected as executive Directors of the eighth session of the Board[163] - Ms. Liu Min and Mr. Liu Xiyue were elected as shareholder representative Supervisors of the eighth session of the Supervisory Committee[164] - Mr. Rao Minghong was re-elected as the employee representative Supervisor of the eighth session of the Supervisory Committee on March 2, 2023[164] - The term of office for the eighth session of the Board and Supervisory Committee is three years commencing from the date of the 2022 AGM[163][164] - Mr. Zhong Shanshan was appointed as the chairman of the eighth session of the Board and General Manager of the Company on May 16, 2023[166] - Ms. Wu Limin was appointed as the Chief Financial Officer of the Company on May 16, 2023[166] - Mr. Xiang Xiansong was appointed as the General Manager of the Sales & Marketing Center of the Company on May 16, 2023[166] - Ms. Han Linyou was appointed as the Board Secretary of the Company on May 16, 2023[166] - Ms. Liu Min was appointed as the chairman of the eighth session of the Supervisory Committee on May 16, 2023[167] - Ms. Mak Po Man Cherie resigned as one of the joint company secretaries of the Company on February 13, 2024[167] - Ms. Han Linyou was appointed as the sole company secretary of the Company on February 13, 2024[167] - Ms. Xue Lian resigned as a non-executive Director of the Company in March 2024 due to family reasons[169] - Ms. Liu Min resigned as a Supervisor and the chairman of the Supervisory Committee of the Company in March 2024 due to changes of her work[169] - Mr. Rao Minghong resigned as a Supervisor of the Company in March 2024 due to adjustment of work[169] - The Company's Audit Committee consists of three independent non-executive directors, including Mr. Stanley Yi Chang, Mr. Yang Lei Bob, and Mr. Lu Yuan, with Mr. Stanley Yi Chang serving as the chairman[181] - The Audit Committee is responsible for reviewing and supervising the Company's financial information and reporting procedures, including the completeness of financial statements and reports[182] - The Company arranged orientation training for new Directors, Supervisors, and senior management to enhance their understanding of the Listing Rules and the Corporate Governance Code[177] - All Directors participated in continuous professional development by attending training courses, conducting business research, or reading materials on corporate governance and related topics[177] - The Company's senior management reported business activities and development information to all Directors on a timely basis during Board meetings[175] - The Company ensures that Directors can seek independent professional advice upon reasonable request, with expenses covered by the Company[177] - The Audit Committee advises the Board on the appointment, renewal, replacement, or dismissal of the external audit agency[182] - The Audit Committee reviews and supervises the independence and objectivity of the external audit agency and the effectiveness of audit procedures[182] - The Audit Committee formulates and implements policies for non-audit services provided by the external audit agency[182] - The Audit Committee monitors the relationship between the Company and the external audit agency[182] - The Audit Committee held 3 meetings during the reporting period with full attendance from all members[185][186] - The Audit Committee reviewed the interim report for the six months ended June 30, 2023, confirming compliance with accounting principles and adequate disclosures[187] - The Audit Committee reviewed the annual results for the year ended December 31, 2023, finding no material deficiencies in risk management or internal control[188] - The Audit Committee recommended re-appointing Pan-China Certified Public Accountants LLP as domestic auditors and Ernst & Young as overseas auditors for 2024[188] - The Nomination Committee comprises three directors, including one executive director and two independent non-executive directors[192] - The Nomination Committee is responsible for formulating nomination procedures and standards for director candidates[192] - The Nomination Committee evaluates candidates for directors and senior management, making recommendations to the Board[193] - The Nomination Committee assesses the independence of independent non-executive directors[193] - The Nomination Committee reviews the Board's structure, size, and composition annually, recommending changes aligned with corporate strategies[194] - The Board consists of 3 female and 6 male Directors, maintaining gender diversity[198] - The gender ratio of all employees (including senior management) is approximately 70% male to 30% female as of December 31, 2023[199] - The Nomination Committee held 1 meeting during the reporting period[200] - The Company has adopted a Board diversity policy considering factors like gender, age, culture, education background, professional experience, skills, knowledge, and length of service[197] - The Nomination Committee reviews the Board diversity policy annually to ensure its effectiveness[197] - The Company's diversity policy includes monitoring, reporting, and reviewing systems to ensure successful implementation[197] - The Nomination Committee believes the Board composition satisfies the diversity policy in terms of gender, age, cultural and educational background, professional experience, skills, knowledge, and length of service[197] - The Company will continue to maintain a diverse Board and fully consider gender in the selection and development of nominees[199] - The Nomination Committee and Human Resources Center will focus on maintaining and strengthening the concern, selection, and development of high-potential female talents[199] Sustainability and Social Responsibility - Water intensity reduced by 14% compared to 2020, achieving 70% of the 2030 strategic target[133] - All water and beverage production plants obtained ISO 14001 certification[132] - 99% of plastic packaging for water and beverage products is recyclable, aiming for 100% by 2025[137] - 100% of employees participated in customized training programs[139] - National-level random inspection qualification rate reached 100% in 2023[140] - 100% of products were recognized in third-party review and certification[140] - Wastewater treatment efficiency improved significantly after upgrading or expanding ten plant stations[136] - ISO 9001 and ISO 22000 (HACCP) certifications obtained by all plants[140] - Energy structure optimization and low-carbon logistics planning reduced value chain carbon emissions[134] - Nongfu Spring actively fulfills social responsibilities through charitable activities in disaster relief, poverty alleviation, education improvement, and public sports[141][143] - The company is committed to building a sustainable supply chain with policies on supplier lifecycle management, health, safety, and environmental standards[141][143] - Nongfu Spring aims to become a leader in sustainability while providing natural and healthy products[144] - The 2023 Sustainability Report was released alongside the Annual Report, available on the Stock Exchange and company websites[144] - The global situation in 2024 remains complex, with a focus on recovery and development[142][145] - The domestic consumer market is expected to maintain steady and positive recovery, presenting opportunities for the food and beverage industry[142][145] - The company will strengthen brand building and adapt to market changes while adhering to healthy and natural product concepts

Investment Rating - The report maintains a "Buy" rating for the company [1][2] Core Views - The company reported a revenue of 42.67 billion yuan in 2023, representing a year-over-year increase of 28%, and a net profit attributable to shareholders of 12.08 billion yuan, up 42% year-over-year [1] - The beverage segment, particularly tea drinks, showed significant growth, with tea beverage revenue increasing by 83% year-over-year [1] - The company's gross margin improved to 59.5%, up 2.1 percentage points year-over-year, driven by lower costs of raw materials [1] - Recent negative online sentiment has impacted sales through online channels, but the overall competitive position of the company's products remains strong [1] Financial Performance Summary - Revenue and Profit Forecast: The company is expected to achieve revenues of 50.70 billion yuan and 58.56 billion yuan in 2024 and 2025, respectively, with net profits projected at 13.17 billion yuan and 14.90 billion yuan [3] - Earnings Per Share (EPS): The forecasted EPS for 2023, 2024, and 2025 are 1.07 yuan, 1.17 yuan, and 1.32 yuan, respectively [2][3] - Gross Margin: The gross margin is expected to remain stable around 59.2% in 2024 and 58.9% in 2025 [3] Valuation and Price Target - The estimated equity value of the company is 556.1 billion yuan, leading to a target price of 54.34 HKD per share based on the FCFF valuation method [2][6] - The report calculates a WACC of 6.99% for the company, which is used in the valuation analysis [6][7] Market Performance - The company's stock price as of March 28, 2024, was 42.25 HKD, with a 52-week range of 46.75 HKD to 37.95 HKD [4] - The report notes a relative performance of the stock against the Hang Seng Index, indicating a slight outperformance in the short term [4]

Investment Rating - Buy (maintained) [1] Core Views - The company achieved robust growth in 2023, with revenue reaching RMB 42.667 billion, a year-on-year increase of 28.4%, and net profit attributable to shareholders of RMB 12.079 billion, up 42.2% year-on-year [1] - The tea beverage segment showed remarkable growth, with revenue increasing by 83.3% year-on-year to RMB 12.659 billion, driven by the rapid development of the sugar-free tea industry and the company's brand cultivation over the past decade [2] - The company's gross profit margin improved to 59.55%, up 2.10 percentage points year-on-year, attributed to lower raw material costs such as packaging materials and PET [3] - The net profit margin reached 28.31%, an increase of 2.75 percentage points year-on-year, marking a record high since the company's listing [3] Financial Performance - In 2023, the company's revenue from packaged water increased by 10.9% year-on-year to RMB 20.262 billion, supported by marketing efforts highlighting premium water sources [2] - Functional beverages generated revenue of RMB 4.902 billion, up 27.7% year-on-year, benefiting from increased consumer awareness post-pandemic [2] - Juice beverages contributed RMB 3.533 billion in revenue, a 22.7% year-on-year increase, driven by product innovation and expanded offerings [2] - The company's operating income for the second half of 2023 was RMB 22.205 billion, up 33.44% year-on-year, with net profit attributable to shareholders of RMB 6.304 billion, a 62.19% increase [1] Market Data and Valuation - The current stock price is HKD 42.25, with a 52-week range of HKD 37.95 to HKD 46.75 [3] - The company's total market capitalization is HKD 475.163 billion, with a circulating market capitalization of HKD 212.715 billion [3] - The average daily trading volume is HKD 221.86 million, with a one-month turnover rate of 2.36% [3] - The company's P/E ratio for 2023 is 38.90x, expected to decrease to 31.02x in 2024, 27.35x in 2025, and 24.15x in 2026 [4] Future Projections - Revenue is projected to grow to RMB 51.032 billion in 2024, RMB 58.716 billion in 2025, and RMB 66.956 billion in 2026, with growth rates of 20%, 15%, and 14% respectively [4] - Net profit attributable to shareholders is expected to reach RMB 14.123 billion in 2024, RMB 16.019 billion in 2025, and RMB 18.138 billion in 2026, with growth rates of 17%, 13%, and 13% respectively [4] - EPS is forecasted to be RMB 1.26 in 2024, RMB 1.42 in 2025, and RMB 1.61 in 2026 [4] Product Segments - Packaged water remains the core driver, with the company reinforcing its leadership position through marketing and product upgrades [2] - The tea beverage segment, particularly the "Oriental Leaf" brand, is expected to continue its rapid growth due to the expanding sugar-free tea market [2] - Functional beverages and juice products are also expected to benefit from industry growth and product innovation [2]

Investment Rating - The investment rating for the company is "Buy" [1][3]. Core Insights - The company has shown robust revenue growth, with a total revenue of 42.667 billion RMB in 2023, representing a year-on-year increase of 27.4% [2]. - The net profit attributable to shareholders reached 12.079 billion RMB in 2023, up 42.2% year-on-year, indicating significant improvement in profitability [2]. - The company has diversified its product offerings beyond packaged water, focusing on health-oriented beverages such as tea drinks, functional drinks, and fruit juices, which have all seen substantial growth [2][3]. - The gross profit margin improved to 59.5% in 2023, an increase of 2.1 percentage points year-on-year, driven by lower raw material costs and supply chain optimization [2]. Summary by Sections Revenue Performance - In H2 2023, the company achieved revenue of 22.204 billion RMB, a year-on-year increase of 37.5% [1]. - Packaged drinking water revenue grew by 10.2% year-on-year to 9.82 billion RMB in H2 2023, with total annual revenue surpassing 20 billion RMB [1]. - Tea beverage revenue surged by 104.9% year-on-year to 7.373 billion RMB in H2 2023, with annual revenue increasing by 83.3% to 12.659 billion RMB [1]. Profitability Metrics - The net profit margin for 2023 was 28.3%, reflecting a 2.8 percentage point increase from the previous year [2]. - The company’s operating efficiency improved, with a decrease in sales expense ratio by 1.8 percentage points to 21.8% and management expense ratio down by 0.5 percentage points to 5.1% [2]. Future Earnings Projections - Earnings per share (EPS) are projected to be 1.33 RMB, 1.58 RMB, and 1.81 RMB for the years 2024, 2025, and 2026 respectively [2][3]. - The company is expected to maintain a price-to-earnings (P/E) ratio of 29, 25, and 22 for the same years, indicating a relatively low valuation compared to historical levels [3]. Competitive Positioning - The company is positioned as a benchmark in the beverage industry, demonstrating both growth potential and profitability across multiple product categories [3]. - The strategic focus on "natural and healthy" products has allowed the company to expand its market presence effectively [3].