Zhao Yin Guo Ji·2024-03-27 16:00Investment Rating - The report maintains a "Buy" rating for the company, with a target price currently under review [1][3]. Core Insights - The company reported a revenue and net profit growth of 33.4% and 62.2% respectively in 2H23, exceeding expectations. The overall revenue and net profit for the year reached new highs, with a gross margin increase of 2.1 percentage points to 59.5% and a net profit margin at a historical high of 28% [1]. - The sugar-free tea business has significantly increased its contribution to nearly 30% of total revenue, while the share of packaged water has decreased to 48%. The company aims for double-digit growth across all business segments in 2024 [1]. - The company does not prioritize maintaining high gross margins and expects long-term profit margins to revert to around 25%. The growth in profitability is anticipated to outpace revenue growth, supported by controlled material costs and improved operational efficiency [1]. Financial Summary - For FY23E, the company expects sales revenue to reach RMB 42,194 million, with a year-on-year growth of 26.9%. Net profit is projected at RMB 11,179 million, reflecting a 31.6% increase [2][11]. - The earnings per share (EPS) for FY23E is estimated at RMB 0.99, with a price-to-earnings (P/E) ratio of 38.7 [2][11]. - The company’s gross profit margin is expected to be 59.4% for FY23E, with an EBIT margin of 33.2% and a net profit margin of 26.5% [7][11]. Market Performance - The current market capitalization of the company is approximately HKD 209,947 million, with a 52-week stock price range of HKD 46.30 to HKD 38.50 [4]. - The stock has shown a potential upside of 40.0% from the current price of HKD 41.3 to the target price of HKD 57.8 [3][4].