EBSCN·2025-08-28 09:24Investment Rating - The report upgrades the investment rating for Nongfu Spring (9633.HK) to "Buy" [1][9]. Core Views - The company achieved impressive performance in H1 2025, with revenue of 25.622 billion yuan, a year-on-year increase of 15.6%, and a net profit attributable to shareholders of 7.622 billion yuan, up 22.1% year-on-year [4][9]. - The strong recovery in bottled water sales and double-digit growth in ready-to-drink tea revenue were highlighted, driven by improved public sentiment and increased domestic tourism [5][7]. - The company is expected to maintain robust growth in 2025, with a projected revenue increase of double digits and improved profit margins due to cost advantages and product structure optimization [8][9]. Summary by Sections Financial Performance - In H1 2025, Nongfu Spring's gross margin reached 60.3%, up 1.5 percentage points year-on-year, attributed to lower raw material costs and improved revenue scale [6]. - The sales expense ratio decreased to 19.6%, down 2.8 percentage points year-on-year, due to reduced advertising and promotional expenses [6]. Product Categories - Bottled Water: Revenue of 9.443 billion yuan, up 10.7% year-on-year, supported by improved public sentiment and increased consumer awareness of natural water [5][7]. - Ready-to-Drink Tea: Revenue of 10.089 billion yuan, a 19.7% increase year-on-year, driven by the brand's strong market position and successful promotional activities [5][8]. - Functional Beverages: Revenue of 2.898 billion yuan, up 13.6% year-on-year, due to enhanced brand exposure [5]. - Juice Beverages: Revenue of 2.564 billion yuan, a 21.3% increase year-on-year, supported by new product launches and channel expansion [5]. - Other Products: Revenue of 629 million yuan, up 14.8% year-on-year, reflecting the company's adaptation to health trends [5]. Future Outlook - The company is expected to achieve a net profit of 14.838 billion yuan in 2025, with a growth rate of 22.4% [10]. - The report anticipates continued growth in the ready-to-drink tea segment and a recovery in bottled water sales, with a focus on new product development and market expansion [8][9].