Understanding the Market | NONGFU SPRING rises over 4%, Citi states the company is expected to benefit from the fermentation of competitor opinions and is optimistic about its strong business recovery momentum
NONGFU SPRING's stock price rose by more than 4%, reaching a new high of HKD 44.9 since May last year. Analysts at CLSA believe that NONGFU SPRING is expected to benefit from the dispute over assets involving its competitor Wahaha, leading to accelerated market share growth. The report pointed out that NONGFU SPRING has seen strong sales since March and is expected to continue maintaining good growth. Cathay Securities also holds a positive outlook on its short-term and medium-to-long-term competitive advantages, believing that the company is likely to achieve restorative growth
According to Zhitong Finance APP, NONGFU SPRING (09633) rose over 4%, reaching a high of HKD 44.9, a new high since May last year. As of the time of publication, it was up 4.07%, priced at HKD 44.75, with a transaction volume of HKD 356 million.
In terms of news, Citibank released a research report stating that the late founder of Wahaha, Zong Qinghou's family, has erupted into a dispute over inheritance, which may affect the group's product sales and market share. In contrast, NONGFU SPRING is expected to benefit from this situation, with its market share accelerating growth. The report pointed out that channel data shows that Wahaha's bottled water online sales have significantly declined, with the average daily sales in the first week of July being RMB 75,000 to 100,000, while from July 18 to 19, it dropped to between RMB 25,000 and 50,000. In comparison, NONGFU SPRING has recorded strong double-digit growth in bottled water sales since March this year, and its market share is expected to gradually recover. Citibank stated that since March, it has listed NONGFU SPRING as a preferred stock, optimistic about its strong business recovery momentum.
Guotai Junan Securities pointed out that the company is a rare beverage super brand in China that combines scale, growth, and profitability. In the short term, the company's performance is expected to continue to show high prosperity, and in the medium to long term, the company's competitive advantages are evident, with a high growth ceiling. Currently, the company's market share in packaged water is showing a gradual recovery trend, and it is expected to achieve good restorative growth due to the low base effect. Sugar-free tea benefits from the continuous increase in market share, coupled with promotional activities, and is expected to maintain rapid growth. In addition, benefiting from the decline in some raw material prices and product structure optimization, the company is likely to continue to maintain a favorable profit level
