Core Viewpoint - The company faced a significant crisis in 2024 due to a sudden wave of public criticism, leading to a sharp decline in sales and revenue, particularly in its core bottled water business, which saw a 21.3% year-on-year revenue drop. However, the company rebounded in the first half of 2025, reporting a 15.6% increase in total revenue and a 22.1% increase in net profit, surpassing market expectations [1][3][21]. Group 1: Bottled Water Business - The bottled water segment was severely impacted by both public opinion and aggressive price competition from rivals, prompting the company to launch a low-priced green bottle water product as a tactical response [4][5]. - The introduction of the green bottle water product aimed to disrupt competitors and penetrate previously inaccessible market segments, leading to a significant price war that forced competitors to react defensively [5][8]. - By mid-2025, the company shifted focus back to its core red bottle natural water, reducing subsidies for the green bottle and increasing the revenue share of red bottle water to over 80% [9][21]. Group 2: Tea Beverage Business - The tea beverage segment, particularly the "Oriental Leaf" brand, demonstrated strong growth, achieving a revenue of 10.1 billion RMB in the first half of 2025, a 19.7% increase year-on-year, and becoming the company's largest business segment [10][11]. - The tea business maintained a high operating profit margin of 48.4%, attributed to effective supply chain management and early investments in the tea production process [12][14]. - The company's proactive marketing strategies, such as the "One Yuan Enjoyment" campaign, helped maintain a market share of 70% in key regions for its tea products [12][14]. Group 3: Other Beverage Segments - The functional beverage segment reported a revenue of 2.9 billion RMB, a 13.6% increase, showcasing the company's strong channel capabilities despite facing tough competition [17][20]. - The juice beverage segment achieved a remarkable growth rate of 21.3%, with revenue reaching 2.6 billion RMB, indicating successful penetration into both high-end and mass-market segments [18][19]. - The company's dual strategy of targeting both premium and value markets in the juice category highlights its operational flexibility and platform capabilities [19][20]. Group 4: Financial Performance and Market Position - The company's financial results for the first half of 2025 indicated a successful recovery from the previous year's crisis, with a gross margin exceeding 60% and a net profit margin close to 30%, positioning it competitively against both domestic and international peers [23][24]. - The rapid recovery and strong financial metrics suggest that the company's true competitive advantage lies in its internal operational structure rather than just its access to natural resources [23][24]. - Following the release of the financial report, the company's stock price surged by 6%, reflecting positive market sentiment and confidence in its recovery strategy [21].

Core Viewpoint - The company reported a strong performance in H1 2025, with a significant recovery in overall business driven by increased promotion of its red bottle water and reduced subsidies for green bottle water, exceeding market expectations [1][9][10]. Packaging Water Business - The packaging water segment achieved revenue of 9.44 billion yuan, a year-on-year increase of 10.7%, marking a return to positive growth after two consecutive declines [2][12]. - The proportion of red bottle water in packaging water revenue increased from approximately 75% in H2 2024 to over 78% in H1 2025, as the company reduced green bottle water subsidies [2][12]. - The operating profit margin for the packaging water business rose to 35%, returning to pre-controversy levels [3][13]. Tea Beverage Business - The tea beverage segment generated revenue of 10.09 billion yuan, a year-on-year growth of 19.7%, benefiting from promotional activities and new product launches [3][17]. - The market share of the sugar-free tea product "Oriental Leaf" increased from 70% to 75% due to effective marketing strategies [3][17]. - The operating profit margin for the tea beverage segment reached a record high of 48% [3][17]. Functional Beverages & Juice - Functional beverages and juice segments showed strong performance, with functional beverages achieving revenue of 2.9 billion yuan, a year-on-year increase of 13.6% [4][19]. - The juice segment generated revenue of 2.56 billion yuan, growing by 21.3%, with the 17.5° NFC orange juice becoming a hot-selling item after entering Sam's Club [4][19]. Gross Margin Improvement - The company's gross margin slightly increased by 1.5 percentage points to 60.3%, driven by lower prices of key raw materials and an increased proportion of high-margin products [4][23]. Decrease in Expense Ratio - The sales expense ratio decreased by 2.8 percentage points to 19.6%, attributed to reduced subsidies for green bottle water and a focus on higher-margin products [4][25]. - The net profit margin reached 29.8%, exceeding market expectations [4][25].