

Core Viewpoint - The profit expansion prospects for Master Kong Holdings (00322) will face increasing resistance due to the diminishing tailwind from price increases and intensified competition in the Chinese soft drink industry, particularly in the summer fresh beverage segment, leading to a rating of "underperform" [1] Financial Performance - Master Kong's revenue for the first half of the year decreased by 2.7% compared to the same period last year, while core profit increased by 12% year-on-year, primarily due to an expansion in gross margin from 32.6% to 34.5% [1] - Revenue was 2% lower than market expectations, but core profit was roughly in line with market expectations, attributed to stronger-than-expected gross margin expansion [1] Product Line Performance - The only highlight in Master Kong's performance for the first half of the year was in the carbonated beverage segment, benefiting from price increases by its largest competitor, Coca-Cola, and a recovery in overall carbonated beverage consumption in China [1]