GTHT Securities has released a research report maintaining an "Overweight" rating on NONGFU SPRING (09633). Considering the low base in H2 2025, the rollout of various market initiatives, and favorable PET bottle chip prices, the firm is optimistic about an acceleration in NONGFU SPRING's H2 2025 revenue, with profits expected to remain at an excellent level. The EPS forecasts for 2025-2027 have been raised to 1.38/1.66/1.93 yuan (from previous estimates of 1.35/1.62/1.91 yuan). Based on the company's superior quality and favorable industry outlook for the coming years, a 35x P/E ratio (2026E) is applied, resulting in a target price of HKD 63.85 per share. The main points from GTHT Securities are as follows:
Market initiatives continue to gain traction, with H2 performance expected to accelerate. (1) The company's packaged water revenue grew by 10.7% in H1 2025, indicating a steady recovery. According to Mashang Ying, the company's packaged water market share saw a significant rebound during the peak season of July-August 2025. Given the low base in H2 2024 and continued efforts in channel development, the firm anticipates a further recovery in packaged water market share in H2 2025, with revenue recovery likely to accelerate. (2) Tea beverage revenue surged by 19.7% in H1 2025, achieving rapid growth. In 2025, both the "Dongfang Shuye" and "Ice Tea" brands launched promotions such as "Open the Cap to Win Prizes" and "Redeem for One Yuan," which are expected to have significantly boosted sales since the Q3 2025 peak season. Furthermore, with the rising trend of warm cabinet consumption in Q4 2025, the company's tea beverages are also projected to benefit. Concurrently, the Dongfang Shuye product line continues to diversify, with a 900mL black tea variant launched in December 2025. According to Mashang Ying, the company's tea beverage market share increased by 4.1% and 5.7% year-on-year in H1 and H2 2025, respectively, showing an accelerated share gain in the second half. Benefiting from a low base and ongoing marketing activities, the firm expects tea beverage performance to accelerate in H2 2025. (3) Juice revenue increased by 21.3% in H1 2025. Given that the C100 brand benefits from enriched outdoor consumption scenarios and NFC juice maintains a strong competitive edge, the firm remains positive on the continued vitality of the juice segment in H2 2025. Overall, with H1 2025 growth of 15.6% year-on-year on a relatively normalized base (H1 2024 revenue grew 8.36% year-on-year), and entering H2 2025 with the benefit of a low comparable base and peak-season market efforts, the firm anticipates that H2 revenue growth will accelerate compared to H1.
Favorable PET bottle chip prices and reduced one-off brand promotion expenses support confidence in profitability. The primary raw material for beverages is PET bottle chips. According to Wind data, PET bottle chip prices in H2 2025 decreased by 11.12% year-on-year and 3.60% quarter-on-quarter. The firm believes the continued downward trend in PET bottle chip prices will positively impact the company's gross margin performance in the second half. Additionally, considering the one-off increase in sales expenses from the Dongfang Shuye brand promotion during the Paris Olympics in H2 2024, and the absence of major promotional activities in H2 2025, the firm expects the company to maintain a strong profit level in the second half.
Risk warnings include (1) food safety risks, (2) demand falling short of expectations, and (3) cost fluctuations.
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