Investment Rating - The report initiates coverage with a "Buy" rating for China Resources Beverage [4][10][12] Core Views - China Resources Beverage, as a leading packaged water company, benefits from both revenue and profit growth. The company is expected to enjoy the industry's penetration rate increase and has made initial progress in its beverage business with the "Zhiben Qingrun" chrysanthemum tea series. The company is projected to improve its profitability through various cost-reduction strategies and increased self-production rates [4][10][40]. Summary by Sections Company Overview - China Resources Beverage is a subsidiary of China Resources Group, focusing on packaged water and beverage businesses. Its core brand "Yibao" is a leading purified water brand in China, with a market share of 18.4% in 2023. The company has launched several beverage brands to diversify its product offerings, now totaling 13 brands and 56 SKUs [7][19]. Packaged Water Business - The packaged water market in China has grown from 152.6 billion yuan in 2018 to 215 billion yuan in 2023, with a CAGR of 7.1%. The company aims to increase its self-production rate from 32% in 2023 to over 60% by the end of the 14th Five-Year Plan, which is expected to significantly enhance its profitability [8][10][40]. Beverage Business - The beverage segment has shown rapid growth, with the "Zhiben Qingrun" series achieving a market share of 38.5% in 2023. The company aims to improve channel efficiency and reduce sales expenses through continuous product launches and increased distribution [9][10][31]. Financial Forecast and Investment Recommendations - The company is expected to generate revenues of 140.7 billion yuan, 150.6 billion yuan, and 161.4 billion yuan for the years 2025, 2026, and 2027, respectively. Corresponding net profits are projected to be 19.2 billion yuan, 22.4 billion yuan, and 26.1 billion yuan. The EPS is forecasted to be 0.8, 0.93, and 1.09 yuan, with PE ratios of 15X, 13X, and 11X for the same years [10][12][29].