UNI-PRESIDENT CHINA(220.HK)：3Q NET PROFIT GREW 8% YOY SLIGHTLY MISSED; 4Q SALES STILL UNDER PRESSURE; LT SALES GOAL(I.E. +6%-8% YOY)UNCHANGED

Core Viewpoint - UPC's 3Q25 net profit reached RMB726 million, reflecting an 8% year-over-year increase, but slightly below expectations [1] - The company anticipates challenges in the beverage sector due to industry destocking, while maintaining long-term sales and profitability guidance [1][3] Financial Performance - 3Q25 net profit was RMB726 million, an increase of 8.4% year-over-year, with 9M25 net profit totaling RMB2,013 million, up 23.1% year-over-year [1] - Sales momentum softened in 3Q25, with food sales increasing at a low-single-digit to mid-single-digit percentage year-over-year, while beverage sales decreased at a low-single-digit to mid-single-digit percentage [2] Sales Outlook - Management maintains a long-term sales growth target of 6%-8% year-over-year, expecting gross profit margin to improve in 2025-26 due to product mix enhancement and sales leveraging [3] - The OEM business continues to show double-digit year-over-year growth, although overall sales are expected to weaken in October due to soft demand and competition [2] Strategic Initiatives - UPC's competitive advantage lies in its product matrix and continuous innovation, with stable point-of-sale coverage and a focus on structural optimization [3] - The total number of commercial refrigerators increased by 150,000 by 3Q25, indicating a commitment to maintaining this strategy [3] Valuation and Investment Perspective - The company revised down its top- and bottom-line forecasts for 2025-27 by 2%-5% and 3%-6% respectively, reflecting caution regarding beverage sales growth [4] - The forecasted EPS growth rate is now projected at a CAGR of 12.5% from 2024 to 2027, down from 14.8% [4] - The company maintains a BUY rating with a target price of HK$10.40, representing a P/E ratio of 18.9x for 2025 and 17.0x for 2026, alongside a dividend yield of 6%-7% [5]