JP Morgan lowers NONGFU SPRING's target price to 55 yuan, maintains "Overweight" rating

JP Morgan published a research report indicating that the market has slightly lowered its profit expectations for NONGFU SPRING (09633.HK) in the second half of the year, coupled with a divergence in profit forecasts for next year, leading to a surge in profit-taking by investors, which has resulted in the stock's recent performance lagging behind the market.

As the end of the year approaches, the divergence in investor expectations for NONGFU SPRING's outlook for next year has intensified. The bank has slightly lowered the company's profit margin expectations for this year and reduced the earnings per share forecast for 2026 to 2027 by 2% to 3% to reflect a more conservative assessment of industry competition next year, maintaining the company's "Overweight" rating and lowering the target price from HKD 62.3 to HKD 55.

JP Morgan stated that in the basic forecast for 2026, NONGFU SPRING's revenue from bottled water and tea drinks is expected to grow by 10% and 15% year-on-year, respectively, with PET prices remaining stable, and gross margin and net profit margin remaining steady. The bank expects the company's net profit to reach RMB 17 billion, a year-on-year increase of 14%, with a net profit margin of 30%