Core Viewpoint - CICC has raised its profit forecasts for Master Kong Holdings (00322) for 2025 and 2026 by 3% and 6% to HKD 4.4 billion and HKD 4.9 billion respectively, due to improved gross margins [1] Group 1: Financial Performance - In 1H25, Master Kong's revenue was HKD 40.1 billion, a year-on-year decrease of 2.7%, while net profit increased by 20.5% to HKD 2.27 billion, with adjusted net profit at HKD 2.11 billion, reflecting a 12% year-on-year increase [1] - The company's gross margin improved by 1.9 percentage points in 1H25, with instant noodles and beverages seeing gross margin increases of 0.7 and 2.5 percentage points respectively [3] - The adjusted net profit margin for 1H25 rose by 0.7 percentage points to 5.3%, indicating stable profit growth [3] Group 2: Segment Performance - In 1H25, the revenue for instant noodles and beverages decreased by 2.5% and 2.6% year-on-year respectively, with market share impacted by price increases from the previous year [2] - Instant noodle sales benefited from successful new product launches, while beverage sales were pressured by price hikes and intensified competition [2] - The company has actively promoted product innovation in beverages, launching various new products, which has significantly increased the proportion of new products compared to previous years [2] Group 3: Future Outlook - The company expects positive revenue growth for instant noodles in 2H25, with a forecast of low single-digit growth in July, driven by improvements in product structure [4] - Beverage performance is anticipated to continue facing pressure in 2H25, but the decline is expected to narrow compared to 1H25 [4] - Overall, the company is projected to maintain stable revenue for the year, with adjusted net profit expected to achieve double-digit year-on-year growth [4]