NONGFU SPRING(09633) 西南证券·2025-03-28 06:20Investment Rating - The report maintains a "Buy" rating for Nongfu Spring (9633.HK) with a target price of HKD 43.35, based on a current price of HKD 34.10 [1]. Core Insights - The report highlights that the bottled water segment is under short-term pressure, but recovery is expected as the peak season approaches. The company is also seeing growth in its tea beverage segment [1][8]. - The company reported a revenue of CNY 428.96 billion for 2024, a year-on-year increase of 0.54%, and a net profit of CNY 121.23 billion, up 0.36% year-on-year. The second half of 2024 saw a revenue decline of 6.7% [8][11]. - The report emphasizes the company's strong market position in bottled water and the ongoing high growth trend in its tea beverage business, supported by innovative product offerings and effective marketing strategies [8][9]. Financial Summary - Revenue Forecast: Expected revenues for 2025, 2026, and 2027 are CNY 493.18 billion, CNY 553.39 billion, and CNY 604.03 billion, respectively, with growth rates of 14.97%, 12.21%, and 9.15% [3][11]. - Net Profit Forecast: Projected net profits for the same years are CNY 141.25 billion, CNY 161.30 billion, and CNY 179.16 billion, with growth rates of 16.51%, 14.19%, and 11.07% [3][11]. - Earnings Per Share (EPS): Expected EPS for 2025, 2026, and 2027 are CNY 1.26, CNY 1.43, and CNY 1.59, respectively [3][11]. - Return on Equity (ROE): The ROE is projected to be 37.23% in 2025, 36.34% in 2026, and 34.75% in 2027 [3][11]. - Price-to-Earnings (PE) Ratio: The PE ratio is expected to decrease from 31.63 in 2024 to 21.41 in 2027 [3][11]. Business Segment Performance - Bottled Water: Revenue for 2024 was CNY 159.52 billion, down 21.3% year-on-year. The volume is expected to recover with a projected growth of 18% in 2025 [11][12]. - Tea Beverages: Revenue increased by 32.3% to CNY 167.45 billion in 2024, with continued strong growth expected [11][12]. - Functional Beverages: Revenue for 2024 was CNY 40.85 billion, with a growth forecast of 15.6% for 2025 [11][12]. - Juice Beverages: Revenue was CNY 11.82 billion in 2024, with a decline expected in the coming years [11][12]. Market Position and Strategy - The report notes that the company is well-positioned in the bottled water market and is expected to recover market share as the impact of recent controversies diminishes. The tea beverage segment continues to thrive, particularly in the no-sugar category [8][9][10]. - The company is focusing on product innovation and expanding its product matrix to align with health trends, which is expected to support long-term growth [8][9].