Ge Long Hui·2025-07-22 18:47Core Viewpoint - The beverage sector is entering a sales peak with the arrival of summer heat, and the company is advised to focus on competitive evolution and new product trends [1] Competitive Landscape - Since 2025, competition in the packaged water industry has eased year-on-year, with the company regaining market share after the impact of public events subsided [1] - The sugar-free tea market remains competitive, but the company has seen a slight increase in market share through its 1 yuan promotional activities [1][2] - The company is reallocating its marketing expenses, reducing subsidies for green bottle purified water while maintaining stable expenses for ready-to-drink tea [2] New Product Development - The company is increasing investment in NFC juice and has partnered with emerging channels like Sam's Club and Pang Donglai [1] - New products such as iced tea (carbonated tea) featuring "real tea, real lemon" have been launched [1] Profitability Outlook - The industry is expected to benefit from cost advantages in 2025, with key raw material prices remaining low, positively impacting the company's gross margin [2] - The company anticipates a year-on-year reduction in expense ratios, particularly in the packaged water segment [2] Long-term Growth Potential - The company is recognized as a relatively scarce platform enterprise in the soft drink sector, with a focus on consumer education and strategic sourcing for its packaged water business [3] - There is potential for increased penetration of sugar-free tea in lower-tier markets, supported by strong product and brand capabilities [3] - The company is also investing in high-concentration NFC juice to capture market share and is exploring opportunities in coffee and health-oriented water products [3] Earnings Forecast and Valuation - The company expects a recovery in packaged water revenue and continued growth in sugar-free tea, with an upward revision of earnings forecasts for 2025-2027 [3] - Projected EPS for 2025-2027 is 1.29/1.45/1.59 yuan, reflecting a 4% increase from previous estimates [3] - The target price is set at 53.59 HKD, based on a 38x PE ratio for 2025, indicating a premium valuation due to the company's strong market position [3]