Jingu Finance News | CICC released a research report indicating that Nongfu Spring (09633) released its 2024 interim performance, achieving a revenue of 22.173 billion yuan, a YoY increase of +8.4%, and a net income attributable to shareholders of 6.24 billion yuan, a YoY increase of +8.0%.
The bank stated that Nongfu Spring's tea beverage revenue in 2024H1 increased by +59.5% YoY to 8.43 billion yuan. The bank believes that the main reason for this is the consumer trend towards healthiness and low-sugar consumption, and the sugar-free teas Dongfang Shuye and Tea Pi continue to show good growth. Under the economies of scale, the adjusted pre-tax profit margin of tea beverages increased by +1.0 percentage points to 44.1% YoY. The revenue of functional beverages in 2024H1 increased by +3.7% YoY to 2.55 billion yuan, with a slightly slower growth rate. The bank believes that this is mainly due to the emphasis on healthy development of packaged drinking water and the rapid development of tea beverages, leading to a tilt in company resources.
The bank further points out that Nongfu Spring is a target in the beverage industry with leading growth ability, profitability, and scale. In the dual-engine development pattern of water and beverages, strong product innovation drives the brand's evergreenness. The company has always adhered to the development strategy of "natural and healthy", which the bank believes is also a long-term development trend in the domestic beverage industry. Therefore, the bank predicts that with the stabilization of online public opinion and the public's understanding of the truth, the packaged drinking water business is expected to improve month-on-month. In addition, the bank is bullish on the rapid growth of sugar-free tea beverage Dongfang Shuye and the overall growth of tea beverages driven by Tea Pi's channel sinking. The bank predicts that Nongfu Spring's EPS for 2024-2026 will be 1.10 yuan, 1.24 yuan, and 1.38 yuan, respectively, with corresponding closing prices on August 30, 2024, of HKD 28.4 per share and RMB 25.84 per share, and PEs of 24, 21, and 19 times, maintaining a "buy" rating.