Investment Rating - The report assigns an "Outperform" rating to the company for the first time [6]. Core Views - The company is positioned as a rare beverage platform enterprise with a long-term growth perspective, benefiting from deep channel barriers and sustainable growth [1][2]. - The packaging water and sugar-free tea sectors are in a long lifecycle with good growth potential, and the company has a leading market share in these segments [2][3]. - The company's revenue and profit forecasts indicate strong growth, with expected revenues of 501 billion, 568 billion, and 632 billion CNY for 2025, 2026, and 2027 respectively, and net profits of 147.9 billion, 169.7 billion, and 189.9 billion CNY for the same years [3][5]. Summary by Sections Company Overview - The company is a leading player in the packaging water sector, with a concentrated shareholding structure and efficient management mechanisms [2][23]. - The founder, Zhong Shanshan, practices long-termism and has a strong vision for the company's growth [2][23]. Packaging Water Market - The packaging water market is projected to reach 247 billion CNY in 2024, with expected mid-single-digit growth driven by large packaging and bulk sales [2][42]. - The company has established a significant lead in the packaging water sector, benefiting from the long lifecycle and ongoing growth of this market [2][52]. Soft Drink Sector - The company has positioned itself well in the rapidly evolving soft drink market, with increasing profitability across various product categories [3][35]. - The report highlights the company's strategic advantage in the soft drink sector, with a focus on health-oriented products like sugar-free tea and functional beverages [3][35]. Competitive Barriers - Strong channel foundations and high-quality product endorsements create significant competitive barriers for the company [3][4]. - The company's long-term operational strategy and substantial investments in channels have solidified its market position [3][4]. Financial Analysis and Forecast - The company is expected to achieve revenues of 501 billion, 568 billion, and 632 billion CNY in 2025, 2026, and 2027, with net profits of 147.9 billion, 169.7 billion, and 189.9 billion CNY respectively [5][3]. - The report anticipates a steady increase in earnings per share, with projections of 1.32, 1.51, and 1.69 CNY for 2025, 2026, and 2027 [5][3]. Valuation and Investment Recommendations - The report suggests a reasonable price range of 56.65 to 59.48 HKD, indicating a potential upside of 20% to 26% from the current stock price [3][6]. - The company is recognized as a rare platform enterprise in the soft drink sector, with strong channels and product endorsements, indicating continued growth potential in the medium to long term [3][6].

Core Viewpoint - Tmall's 618 shopping festival this year adopts a simplified discount mechanism, offering direct reductions of 15% to 50%, which enhances consumer experience and maintains price competitiveness [2][4][18]. Group 1: Changes in Discount Mechanism - Tmall has shifted to a single discount model for 618, eliminating complex "full reduction" strategies, making it easier for consumers to understand and participate [2][5]. - The direct discount approach is seen as a return to the original mission of e-commerce, which is to provide the simplest and cheapest options for consumers [2][4]. - This change comes after years of complex promotional strategies that exhausted consumers, leading to a preference for straightforward discounts [5][6]. Group 2: Performance Metrics - On the first hour of the 618 sale, 43 brands achieved over 100 million in sales, marking a more than 50% increase compared to the previous year [3][4]. - Tmall's parent company, Alibaba Group, reported a 9% year-on-year revenue growth in the most recent quarter, indicating a positive trend in long-term value strategies [3][12]. - The overall sales growth during the 618 event reflects a successful transition to a more consumer-friendly discount model, with significant increases in brand engagement and sales volume [7][16]. Group 3: Strategic Focus on Quality Brands - Tmall is focusing on supporting high-quality and innovative brands, moving away from a one-size-fits-all approach to promotions [12][14]. - The platform has implemented measures to boost new product launches, with significant increases in the number of new products and their sales performance [14][16]. - Tmall's strategy emphasizes the importance of brand innovation and quality over mere price competition, aiming to create a sustainable growth model [18][24]. Group 4: Market Trends and Future Outlook - The e-commerce industry is witnessing a shift from short-term promotional tactics to long-term value creation, as platforms seek to enhance consumer trust and brand loyalty [20][24]. - Tmall's approach to simplifying promotions and focusing on quality products is expected to set a precedent for the industry, encouraging other platforms to follow suit [25]. - The ongoing evolution in consumer behavior and preferences indicates that the market is ready for a more straightforward and value-driven shopping experience [17][24].