Zhongyou Securities released a research report stating that IFBH's (06603) IF Coconut Water brand is projected to sustain rapid growth in 2025, with its growth rate outpacing the broader soft drink sector. The company is continuously expanding its sales channels and signing new distributors while also achieving cost optimizations. In terms of brand building, it is strengthening market recognition by appointing a brand ambassador, launching new products, and increasing marketing investments. A "Buy" rating is maintained. Zhongyou Securities' primary views are as follows: The IF Coconut Water brand continues its strong performance, with the company concurrently advancing brand building and operational enhancements. IF Coconut Water is expected to maintain a rapid growth momentum in 2025, with a growth rate leading the industry average; Innococo sales declined in the first half of 2025, and order fulfillment was affected by channel adjustments in the second half, with normalization expected by year-end post-restructuring, leading the broker to anticipate continued pressure on market performance in the latter half of the year. The company's market share in Q3 2025 increased compared to the same period last year, and distributor inventory is currently within a reasonable and controllable range. From an industry perspective, the coconut water sector is forecast to grow overall by 27.18% in 2025, exceeding the growth rates of the overall soft drink industry (7.78%), carbonated beverages (5.52%), packaged water (12%), and functional beverages (10%), indicating the coconut water industry remains in a high-growth phase. Sales channels continue to expand, with significant results from outlet development. The company signed with COFCO's Famous Chateau Collection in September 2025 and expects further distributor expansion plans, continuously intensifying its channel layout, with further channel expansion anticipated in 2026. On the cost side, with the sustained increase in production capacity in origin regions in recent years, coconut procurement costs decreased in 2025; besides continuing this favorable cost optimization into 2026, the company plans to implement further measures to enhance supply chain operational efficiency and further optimize the cost structure. For branding, Innococo announced a brand ambassador (Teens in Times) in September, simultaneously launched new products, and conducted a series of marketing promotion activities. Brand building efforts will continue in 2026, with plans to increase resource investment on media platforms like Xiaohongshu and WeChat Official Accounts, carry out consumer education initiatives, and continually strengthen brand market recognition. During the China International Import Expo in November 2025, the company officially signed a Memorandum of Cooperation, announcing its establishment in Shanghai's Qingpu District and the setup of the IF brand's China headquarters; the setup of the Shanghai office and team formation will be progressively implemented in 2026. The company announced a share repurchase plan, believing the current share price does not reflect its intrinsic value; to enhance shareholder value, the company plans to repurchase up to 5% of its total issued share capital on the Hong Kong Stock Exchange from time to time over the next six months. Earnings Forecast and Investment Recommendation The broker forecasts the company's revenue for 2025-2027 to be USD 183.86/256.20/322.21 million (RMB 1.287/1.793/2.226 billion), representing year-on-year growth of 16.63%/39.34%/25.77%. Net profit attributable to shareholders is projected to be USD 31.84/51.30/67.42 million (RMB 223/359/472 million), with year-on-year growth of -4.43%/61.13%/31.41%, corresponding to EPS of USD 0.12/0.19/0.25 (RMB 0.84/1.35/1.77). This corresponds to a PE ratio of 18/11/8 times based on the current share price. The "Buy" rating is maintained. Risk warnings include food safety risks and the risk of new products underperforming expectations.
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