Huatai Securities raises NONGFU SPRING's target price to 59.23 yuan, stable operations amid the takeaway battle

The Huatai Securities research report indicates that the Central Financial Office has stated that expanding domestic demand is the top priority task for next year, highlighting expectations for the domestic demand theme. NONGFU SPRING (09633.HK), as a leading soft drink company, has been affected by the price war on delivery platforms in the beverage industry this year, but the company's operational stability is outstanding.

Specifically, the company's packaged water business has emerged from a previous public opinion low, continuously expanding its market share this year. The company's operational focus has shifted back from green bottle purified water to red bottle natural water, and the sugar-free tea business continues to maintain a good revenue growth rate, accelerating penetration into lower-tier markets and further gaining market share. Products such as NFC juice, carbonated tea, and wellness water continue to strengthen consumer cultivation.

In terms of profits, the cost benefits will continue to be released in the second half of this year, and the company's expense control capabilities are strong, avoiding disorderly participation in price competition, which is expected to maintain robust profitability. In addition, measures such as "1 Yuan Enjoyment" have strengthened the company's digital operation capabilities, enhancing connections between channels and consumers, which is expected to support the company's continued upward trajectory in future development, solidifying the foundation of platform-type enterprises.

The firm expects the company's overall revenue to increase by 14% year-on-year in 2026, and has adjusted the net profit forecasts for 2025 to 2027 down by 1%, up by 1%, and up by 3%, to RMB 14.9 billion, RMB 17.3 billion, and RMB 19.5 billion, respectively. The target price has been raised from HKD 56.37 to HKD 59.23, maintaining a "Buy" rating