Investment Rating - The report assigns an "Accumulate" rating to China Resources Beverage (02460.HK) for its first coverage [6]. Core Insights - The packaging drinking water market is expected to grow, with a market size of 215 billion yuan in 2023, reflecting a year-on-year increase of 4.47%, and accounting for 23.65% of the soft drink market [6][35]. - China Resources Beverage holds a leading market share of 32.7% in the pure water segment, benefiting from strong supply chain and cost control capabilities [2][35]. - The company is expected to see revenue growth driven by national expansion and channel refinement, with long-term benefits from industry consolidation and increased market share of mid-sized products [14][35]. Summary by Sections 1. Company Overview - China Resources Beverage has been deeply engaged in the packaging water sector for over 40 years, establishing itself as a leader in the pure water market [19]. - The company has a stable controlling shareholder, with management primarily from the China Resources Group, ensuring operational stability [23]. 2. Market Demand and Competitive Position - The packaging drinking water market is characterized by strong demand, with a compound annual growth rate (CAGR) of 7.10% from 2018 to 2023, outpacing other segments of the soft drink market [35]. - The company’s market position is reinforced by its scale advantages, with a CR5 of 58.6% in the packaging water market, indicating a strong competitive landscape [56]. 3. Profitability and Growth Potential - The company’s revenue from packaging drinking water and beverage products for the first half of 2025 is projected to be 5.251 billion yuan and 955 million yuan, respectively, with a significant growth potential in the beverage segment [2][28]. - The gross margin for packaging water is expected to improve as the company increases its self-production ratio and capacity utilization [2][14]. 4. National Expansion and Channel Strategy - There is substantial room for regional expansion beyond the company's home base, with ongoing efforts to enhance brand image and marketing strategies [3][4]. - The company is focusing on refining its distribution channels and increasing its presence in first-tier and new first-tier cities [3][4]. 5. Financial Projections - Revenue projections for the company from 2025 to 2027 are estimated at 11.2 billion, 12.5 billion, and 13.4 billion yuan, with net profits expected to reach 1.3 billion, 1.6 billion, and 1.8 billion yuan, respectively [14][4].