Caitong Securities has issued a research report forecasting that CR BEVERAGE (02460) will achieve operating revenues of RMB 11.8 billion and RMB 12.7 billion in 2026 and 2027, respectively, representing year-on-year increases of 7% and 7%. Net profit attributable to shareholders is projected to be RMB 1.21 billion and RMB 1.40 billion, corresponding to year-on-year growth of 26% and 16%. The estimated price-to-earnings ratios for these years are 21X and 18X, respectively. Based on these projections, the firm maintains an "Overweight" rating on the stock. Key viewpoints from the report are outlined below.
The water business faces both challenges and opportunities. In the medium to long term, rising consumer health consciousness is expected to continue driving expansion in the packaged water market. Purified water, in particular, benefits from advantages such as rapid production capacity expansion and lower logistics costs. According to CR BEVERAGE's prospectus, the purified water market size is anticipated to grow to RMB 179.8 billion by 2028. As a leading enterprise in the sector, the company is well-positioned to strengthen its core water business through continuous product innovation and accelerated channel penetration.
The beverage segment is demonstrating diversified growth. The company has a multi-category portfolio that includes herbal plant-based drinks, sugar-free tea, sports beverages, and ready-to-drink coffee. In the first half of 2025, the company launched 14 new SKUs, marking its highest-ever innovation density. The report expresses optimism that these new beverage products will achieve rapid market coverage by leveraging the company's solid distribution capabilities, while specialized beverage distributors are expected to enhance market service efficiency.
For 2026, the report highlights several key areas of focus. Improved efficiency in expense control is anticipated. In the first half of 2025, the company's sales expense ratio was 30.4%, an increase of 2.9 percentage points year-on-year, primarily due to sustained strong marketing investments amid intense competition. It is expected that the company will implement more refined financial controls in 2026. The newly appointed Chairman of the Board, Mr. Gao Li, brings extensive financial experience, having previously played a key role in CR BEVERAGE's transition from a single-product to a multi-product company and from regional to national operations. He is expected to facilitate more precise resource allocation strategies while maintaining business momentum.
Comprehensive digital transformation is seen as a significant driver. Digitalization is believed to effectively enhance both production and distribution channels. On the production side, according to the China National Food Industry Association, digital and intelligent upgrades can improve comprehensive efficiency in beverage production by 20% to 30%. In distribution, companies like Dongpeng Beverages have successfully utilized integrated code systems to monitor real-time sales data at the terminal level, enabling effective monitoring of single-point profitability. CR BEVERAGE still has considerable room for development in digital infrastructure. During his tenure as CFO from 2012 to 2020, Mr. Gao Li oversaw the full implementation of the terminal management system SUP and the distributor collaboration platform DMS. He is expected to lead the company in building an end-to-end digital ecosystem.
Channel flattening reforms initiated in 2025 aim to enhance distribution efficiency. The reforms involve reducing channel tiers, increasing profit margins per tier, and boosting both channel efficiency and customer engagement. Initiatives also include establishing specialized beverage distributors, expanding into emerging channels such as online sales and automated vending machines, breaking into key channels like food service, and developing specialty distributors. While these reforms may cause short-term operational disruptions, they are viewed as beneficial for strengthening the company's control over terminal sales in the long run.
The report also notes potential risks, including slower-than-expected sales of new products, intensifying market competition, and fluctuations in the prices of upstream raw materials.
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