Core Viewpoint - The report from China Merchants Securities (Hong Kong) indicates that Uni-President China (00220) has a 6.5% dividend yield that is becoming increasingly attractive, with a potential upgrade to "Overweight" rating if signs of industry stabilization emerge, while currently maintaining a "Neutral" rating [1] Group 1: Financial Performance - Uni-President China's Q3 performance shows ongoing challenges, with net profit increasing by 8% to 726 million RMB, falling short of market expectations for double-digit growth [1] - Revenue remained flat year-on-year, with the food segment achieving low to mid-single-digit growth, offset by a decline in the beverage segment [1] - The OEM business continued to grow at a triple-digit rate, reflecting ongoing headwinds from competition in ready-to-drink beverages and execution risks under the company's volume-driven strategy [1] Group 2: Market Conditions and Outlook - The beverage sector continues to face pressure, particularly in the juice category, with intensified pricing competition [2] - Management reiterated a full-year sales growth target of 6-8%, but achieving this goal may be challenging due to ongoing inventory destocking, sluggish consumption, and increased promotional efforts [2] - The company remains cautiously optimistic for Q4, expecting continued improvement in gross margins and further optimization of expense ratios despite low consumer demand and heightened competition [2] Group 3: Strategic Initiatives - Investments in freezer units (adding 150,000 units by 2025) and sales point upgrades are expected to support long-term growth, although they may not alleviate current pressures in the short term [2] - The focus on expanding and upgrading sales points, along with the launch of core SKU new products, is anticipated to drive growth [2] - Looking ahead to 2026, stable raw material costs and product structure upgrades in beverages and instant noodles are expected to further enhance gross margin expansion [2]