Core Insights - The article highlights the shift in consumer demand from "sugar-free with sweeteners" to "naturally healthy sugar-free" beverages, indicating a growing preference for products without artificial sweeteners [1] - The sugar-free carbonated beverage market is experiencing a recovery after two years of decline, with a notable increase in both at-home and out-of-home consumption starting in Q1 2025 [1][10] Market Trends - The demand for sugar-free carbonated drinks has been significantly influenced by the pandemic, with consumers viewing these beverages as a guilt-free indulgence [5] - The importance of the "enjoyment factor" in carbonated drinks is emphasized, with sugar-free options needing to highlight their unique pleasurable attributes to compete with sugary counterparts [5][17] - The out-of-home consumption of sugar-free carbonated drinks remains dominant, accounting for 60% of total sales, with a notable increase in consumption during work hours [10][17] Consumer Behavior - There is a rising importance of sugar-free carbonated drinks in lower-tier cities, with sales in these areas showing significant growth due to increased purchasing intent and convenience through e-commerce [16][13] - The afternoon work hours are identified as a key consumption period for sugar-free carbonated beverages, suggesting a targeted marketing opportunity for brands [10][17] Brand Strategy - Brands are encouraged to leverage the recovery of the sugar-free carbonated market by emphasizing the category's advantages and focusing on enjoyment while differentiating from sugary options [17] - The article suggests that brands should capitalize on the growing demand in lower-tier cities and enhance their presence in e-commerce channels to maximize market potential [16][13]

Investment Rating - The report maintains an "Outperform" rating for the company [6][10]. Core Views - The company's profitability has improved due to price increases and declining costs, with expectations for revenue acceleration in 2025 [6][10]. - The beverage segment, particularly tea drinks, continues to show strong momentum, contributing significantly to overall profitability [8][10]. - The company is focused on enhancing its core products, optimizing gross margin structure, and innovating product offerings to meet changing consumer trends [9][10]. Financial Summary - Main revenue for 2023 is projected at 80,418 million, with a year-on-year growth of 2% [7]. - Net profit for 2023 is expected to be 3,117 million, reflecting a year-on-year decrease of 18% [7]. - The gross margin is anticipated to improve to 33.10% in 2024, up from 30.42% in 2023 [7]. - The company plans to distribute a total cash dividend of 37.45 billion for 2024, with a payout ratio of 100% [8]. Segment Performance - The beverage business achieved revenue of 516.21 billion in 2024, with a year-on-year growth of 1.3% [8]. - The tea beverage segment generated revenue of 217 billion, marking an 8.2% increase year-on-year [8]. - The instant noodle segment reported revenue of 284.14 billion, a slight decline of 1.3% year-on-year, but with improved gross margin [8][9]. Profitability Forecast - The company forecasts net profits of 4,239 million, 4,694 million, and 5,154 million for 2025, 2026, and 2027 respectively, with corresponding EPS of 0.75, 0.83, and 0.91 [10]. - The report suggests a PE valuation range of 18-22 times for 2025, translating to a per-share value range of 13.50-16.50 HKD [10].