Summary of Nongfu Spring Conference Call Company Overview - **Company**: Nongfu Spring - **Industry**: Bottled Water and Soft Drinks Key Points Financial Performance and Valuation - Nongfu Spring has demonstrated strong performance, with a valuation range of 40-50 times earnings from 2021 to 2023, despite a dip to 20 times in 2024 due to pandemic impacts and declining bottled water revenue. The valuation has since recovered to around 32 times, indicating resilience and recovery capability [2][3][17]. Market Position and Revenue Breakdown - The company leads the bottled water market and has a comprehensive presence in the soft drink sector. Tea beverage revenue reached 16.7 billion, juice revenue was 4.1 billion, and other beverage revenue was 1.2 billion, ranking first, second, and fourth in their respective categories [2][6]. Growth Drivers in Bottled Water Market - The bottled water market has shown high growth potential over the past 20-30 years, driven by pollution events, health trends, and increasing consumer demand for low-sugar and no-sugar products. This trend suggests continued growth opportunities in the future [2][8]. Unique Market Characteristics in China - The Chinese bottled water market features unique channel characteristics, with extensive coverage in rural areas. Although emerging retail channels are promoting private labels, online penetration remains low due to the low price and high weight of bottled water, leading to inefficiencies in online sales [2][11]. Strategic Management and Shareholding Structure - Nongfu Spring is controlled by Zhong Boss and Yangshengtang, holding 85% of the shares. The company has attracted long-term institutional investors, and its experienced management team, with many executives having over a decade of experience, ensures stable development [2][7]. Expansion Strategies - In South China, Nongfu Spring allocates 14% of its gross margin to terminal sales, enhancing profitability for distributors. The company also increases distributor profits through higher-margin beverage products, improving overall channel efficiency [5][14][15]. Product Selection and Competitive Advantage - The company focuses on long lifecycle, high repurchase rate, and functional beverage categories, such as energy drinks and coffee, to meet consumer needs. This strategy has led to increased profitability across various product lines [5][16][19]. Future Outlook - Short-term expectations include accelerated growth in terminal operating data and a potential return to a 40 times valuation if performance in iced tea or NFC products improves. Long-term projections suggest a revenue growth of 10%-15% over the next three years, with the possibility of becoming a Chinese equivalent of Coca-Cola [17][18]. International Expansion Potential - Products like sugar-free tea have potential for international markets, particularly in Europe and the United States, indicating a strategic direction for future growth [18]. Additional Insights - The company’s ability to maintain a competitive edge in the soft drink industry is attributed to its strong channel competitiveness, brand leadership, and new product development capabilities, positioning it as a unique platform company in the fast-moving consumer goods sector [19].

天眼查App显示，近日，农夫山泉湖北丹江口（均州）饮料有限公司发生工商变更，钟睒睒卸任法定代 表人、郭振卸任经理，均由饶明红接任。该公司成立于2017年7月，注册资本5000万人民币，经营范围 包括饮料生产、食品销售、食品生产、食品添加剂生产、食用农产品初加工、食用农产品批发等。股东 信息显示，该公司由农夫山泉（09633.HK）全资持股。 ...

天眼查App显示，8月5日，农夫山泉湖北丹江口（均州）饮料有限公司发生工商变更，钟睒睒卸任法定 代表人、郭振卸任经理，均由饶明红接任。该公司成立于2017年7月，注册资本5000万人民币，经营范 围包括饮料生产、食品销售、食品生产、食品添加剂生产、食用农产品初加工、食用农产品批发等。股 东信息显示，该公司由农夫山泉全资持股。 ...

Core Viewpoint - The bottled water industry is experiencing significant market share changes, with China Resources Beverage's "Yibao" and Nongfu Spring likely to benefit from these shifts [1] Group 1: Company Insights - Nongfu Spring's unsweetened tea products are showing strong growth, with an acceleration expected in July, despite a general decline in overall demand for unsweetened tea compared to last year [1] - China Resources Beverage's "Yibao" is positioned to gain from the market share changes in the bottled water sector [1] - Master Kong Holdings' recovery in the second half of the year will depend on its marketing investment levels [1] Group 2: Industry Trends - The overall performance of liquid milk products is weak, indicating challenges within that segment of the beverage industry [1]

股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 截至月份: 2025年7月31日 狀態: 新提交 致：香港交易及結算所有限公司 公司名稱: 農夫山泉股份有限公司 呈交日期: 2025年8月5日 I. 法定/註冊股本變動 | 1. 股份分類 | 普通股 | 股份類別 | H | | | 於香港聯交所上市 (註1) | | 是 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 09633 | 說明 | H股 | | | | | | | | | | 法定/註冊股份數目 | | | 面值 | | | 法定/註冊股本 | | | 上月底結存 | | | 5,034,666,400 | RMB | | 0.1 | RMB | | 503,466,640 | | 增加 / 減少 (-) | | | 0 | | | | RMB | | | | 本月底結存 | | | 5,034,666,400 | RMB | | 0.1 | RMB | | 503,466,640 | | 2. 股份 ...

Core Viewpoint - The valuation of Nongfu Spring has experienced fluctuations due to public sentiment, but it has actively responded, leading to a recovery in valuation to above 30x. The company's long-term growth potential and excellent business model are the main reasons for its valuation premium [2]. Group 1: Company Overview - Nongfu Spring, established in 1996, is a rare platform enterprise in the soft drink sector in China, with a comprehensive product layout including packaged water, tea, and juice [4]. - In 2024, the company is projected to generate revenue of 42.9 billion and a net profit of 12.1 billion, with a net profit margin of 28%, leading the industry in both revenue scale and profitability [4]. - The company adheres to a long-termism philosophy, aiming to create products that last a century rather than just achieving short-term revenue goals [4]. Group 2: Market Position and Strategy - The company has a highly concentrated shareholding structure, with founder Zhong Shanshan holding 84% of the shares, allowing for stable and efficient management [6]. - Nongfu Spring has a deep involvement in the upstream supply chain, including tea and fruit cultivation, positioning itself as a vertically integrated enterprise [6]. - The management team has extensive experience in the beverage industry, contributing to effective operational mechanisms and industry-leading incentives [6]. Group 3: Industry Dynamics - The packaged water market in China is expected to reach 247 billion in 2024, with a forecasted medium single-digit growth rate, driven by large and bulk packaging [14]. - The industry has experienced a shift from low-cost "one yuan" water to "two yuan" water, with Nongfu Spring successfully increasing its market share during this transition [18]. - The packaged water sector is characterized by a long lifecycle and continuous growth, benefiting from trends towards health and convenience [11][12]. Group 4: Competitive Landscape - The packaged water industry has seen a concentration of market share among leading brands, with Nongfu Spring significantly widening the gap with competitors [15]. - The competitive landscape has evolved through three phases: product-centric, channel-centric, and brand-centric, with Nongfu Spring emerging as a leader in the brand-centric phase [16][18]. - The company has effectively navigated challenges, including public sentiment issues, by focusing on rational pricing strategies and enhancing brand strength [18].

Group 1 - The core viewpoint of the report indicates that several beverage companies in mainland China are expected to announce strong mid-year performance, with notable growth in revenue and profit for specific companies [1] Group 2 - Nongfu Spring (09633) is projected to achieve a robust 15% revenue growth in the first half of the year, driven by a low base and recovery in the bottled water business [1] - Uni-President China (00220) is expected to see a 26% year-on-year increase in net profit and an 8% rise in revenue [1] - However, Tingyi (00322) is anticipated to experience a 3% decline in revenue due to a decrease in market share following last year's price increases [1] Group 3 - The report anticipates intensified industry competition starting from the second quarter of this year, which is expected to continue into the third quarter, but believes it will slow down in the fourth quarter [1] - Nongfu Spring and Uni-President are expected to perform better in the first half of the year, with the main catalyst for the second half being potential structural changes in the bottled water market for Nongfu Spring [1]

智通财经APP获悉，里昂发布研报称，该行所覆盖多家内地饮品股将于8月公布中期业绩，预计农夫山 泉(09633)上半年应该会在低基数和包装水业务复苏下录得15%的强劲收入增长，而统一饮料中国 (00220)的净利润将同比增长26%，收入则升8%。不过，康师傅控股(00322)去年产品提价后，市场份额 有所下降，料上半年收入或同比下降3%。 该行预期，行业竞争自今年第二季起明显加剧，并料将持续至第三季，惟相信可在第四季放缓。该行相 信，农夫山泉和统一上半年的业绩上或表现更佳，而下半年的主要催化剂是农夫山泉在包装水市场可能 出现的结构变化。 ...

Investment Rating - The report assigns an "Outperform" rating to the company for the first time [6]. Core Views - The company is positioned as a rare beverage platform enterprise with a long-term growth perspective, benefiting from deep channel barriers and sustainable growth [1][2]. - The packaging water and sugar-free tea sectors are in a long lifecycle with good growth potential, and the company has a leading market share in these segments [2][3]. - The company's revenue and profit forecasts indicate strong growth, with expected revenues of 501 billion, 568 billion, and 632 billion CNY for 2025, 2026, and 2027 respectively, and net profits of 147.9 billion, 169.7 billion, and 189.9 billion CNY for the same years [3][5]. Summary by Sections Company Overview - The company is a leading player in the packaging water sector, with a concentrated shareholding structure and efficient management mechanisms [2][23]. - The founder, Zhong Shanshan, practices long-termism and has a strong vision for the company's growth [2][23]. Packaging Water Market - The packaging water market is projected to reach 247 billion CNY in 2024, with expected mid-single-digit growth driven by large packaging and bulk sales [2][42]. - The company has established a significant lead in the packaging water sector, benefiting from the long lifecycle and ongoing growth of this market [2][52]. Soft Drink Sector - The company has positioned itself well in the rapidly evolving soft drink market, with increasing profitability across various product categories [3][35]. - The report highlights the company's strategic advantage in the soft drink sector, with a focus on health-oriented products like sugar-free tea and functional beverages [3][35]. Competitive Barriers - Strong channel foundations and high-quality product endorsements create significant competitive barriers for the company [3][4]. - The company's long-term operational strategy and substantial investments in channels have solidified its market position [3][4]. Financial Analysis and Forecast - The company is expected to achieve revenues of 501 billion, 568 billion, and 632 billion CNY in 2025, 2026, and 2027, with net profits of 147.9 billion, 169.7 billion, and 189.9 billion CNY respectively [5][3]. - The report anticipates a steady increase in earnings per share, with projections of 1.32, 1.51, and 1.69 CNY for 2025, 2026, and 2027 [5][3]. Valuation and Investment Recommendations - The report suggests a reasonable price range of 56.65 to 59.48 HKD, indicating a potential upside of 20% to 26% from the current stock price [3][6]. - The company is recognized as a rare platform enterprise in the soft drink sector, with strong channels and product endorsements, indicating continued growth potential in the medium to long term [3][6].

Core Insights - The white birch juice market is rapidly expanding, driven by increasing consumer interest and marketing efforts, particularly through online platforms and live streaming [1][3][10] - The product is marketed as a premium beverage, often referred to as "liquid gold," with claims of various health benefits, although scientific validation of these claims remains limited [4][8][12] - The industry faces challenges related to standardization and quality control, with a lack of unified regulations leading to significant variations in product quality [9][11] Market Dynamics - Sales of white birch juice are booming, with both online and offline channels experiencing significant growth, aided by influencer marketing [2][3] - The price of white birch juice is notably higher than that of imported coconut water, with a reported price of approximately 21.6 yuan per liter, which is about 50% more expensive [9][10] - Major beverage companies, including Nongfu Spring and Huiyuan, are entering the white birch juice market, indicating strong commercial interest [10][12] Health Claims and Consumer Perception - White birch juice is promoted for its purported health benefits, including detoxification and immune support, although these claims lack robust scientific backing [4][6][8] - Consumer interest is driven by curiosity and positive taste experiences, with some customers becoming repeat buyers due to the refreshing flavor [5][6] Industry Standards and Quality Control - The absence of specific national standards for white birch juice processing leads to inconsistencies in product quality, with some brands potentially diluting their products [9][10][11] - A new group standard for natural white birch juice has been introduced, but compliance is voluntary, leading to mixed adherence among producers [10][11] Environmental Concerns - The increasing demand for white birch juice raises concerns about the sustainability of white birch resources, particularly in the context of climate change [12][13] - Research indicates that climate change may negatively impact the growth rates of white birch trees, necessitating careful management of harvesting practices to ensure long-term sustainability [12][15]