Core Viewpoint - China Resources Beverage (华润饮料) has issued a profit warning, expecting a net profit decrease of approximately 20% to 30% for the six months ending June 30, 2025, compared to the same period in 2024 [1] Group 1: Financial Performance - The company's stock price fell significantly, with a maximum intraday drop of over 14% on July 28, closing down 13.08% [2] - For the first half of 2024, revenue was approximately 13.52 billion RMB, a slight increase of 0.05% year-on-year, while net profit was 1.66 billion RMB, reflecting a year-on-year growth of 24.7% [9][10] - The revenue from packaged drinking water in 2024 was 12.12 billion RMB, a decline of 2.6% compared to 2023, accounting for 89.7% of total revenue [10][11] Group 2: Market Competition - The increase in marketing resources and adjustments in product mix have led to a temporary impact on profit performance, with intensified competition in the packaged water industry raising sales and distribution costs [2][9] - The competitive landscape has become more challenging, with competitors like Nongfu Spring launching lower-priced products, leading to a price war in the bottled water market [13] - The company's reliance on packaged drinking water is significant, with its revenue share from this segment decreasing from 95.4% in 2021 to 89.7% in 2024, indicating a need for strategic adjustments [11][13] Group 3: Analyst Ratings and Market Response - UBS has set a target price of 18.03 HKD for China Resources Beverage, maintaining a "Buy" rating despite the profit warning [8] - Conversely, Goldman Sachs downgraded its rating from "Buy" to "Neutral," reducing the target price from 16.4 HKD to 12.1 HKD, and lowered sales forecasts by about 5% and profit forecasts by 26% to 27% for 2025 to 2027 [8]