Investment Rating - The investment rating for Nongfu Spring is "Buy" with a target price of HK$53.30, implying an expected total return of 1.0% [5][8]. Core Insights - Nongfu management maintains a guidance of mid-teen percentage growth in group top-line year-over-year (YoY) and expects net profit margin (NPM) expansion for the full year 2025E [1]. - The company has observed limited impact from the price war in the freshly-made tea segment, attributing this to its high-quality product features and a focus on non-sugar high-end packaged tea products [2]. - The water business is projected to recover steadily, with management targeting low single-digit growth in the packaged water industry and plans to enhance market share [3]. - There is significant growth potential in the ready-to-drink (RTD) tea segment, with management noting that non-sugary tea represents a small portion of the market in China compared to developed markets [4]. - Nongfu aims to expand its functional beverage and juice segments, particularly targeting sports beverages and engaging with younger consumers [5][7]. Summary by Sections Sales and Margin Guidance - Management reiterated guidance for mid-teen percentage growth in top-line sales YoY and NPM expansion for 2025E [1]. Competitive Landscape - The price war in freshly-made tea has had limited impact on Nongfu due to its premium product positioning [2]. Water Business Outlook - The water business is expected to recover, with sales in 1H25 still 10% below 1H23 levels, and management anticipates low single-digit growth in the packaged water industry [3]. Tea Business Outlook - There is ample room for growth in the RTD tea business, with successful campaigns aimed at increasing consumer engagement [4]. Functional Beverages and Juice Outlook - Nongfu is focusing on expanding its sports beverage offerings and leveraging its diverse product portfolio to smooth out seasonal business fluctuations [5][7].