Sealand Securities has released a research report initiating coverage on CR BEVERAGE (ASX: 02460), assigning a "Buy" rating. The firm forecasts the company's operating revenue for 2026-2028 to be 11.9 billion, 12.8 billion, and 13.6 billion yuan, representing year-on-year growth of 8%, 7%, and 6% respectively. Net profit attributable to shareholders is projected to be 1.1 billion, 1.3 billion, and 1.5 billion yuan, with year-on-year growth of 15%, 15%, and 12%. CR BEVERAGE is currently in a phase of deepening reforms and operational recovery. As competition in the packaged water industry becomes more rational, price increases are expected to improve profitability.
Key Points from the Report
Cost pressures are being passed upstream, leading to price adjustments for Yibao brand products. According to available information, effective July 1, 2026, CR BEVERAGE will increase the channel supply price for its Yibao brand bottled water (18.9L) by 1 yuan per barrel. Amid geopolitical tensions, rising oil prices have driven up costs for raw materials like PET. Since March, several regional brands have successively raised ex-factory prices. By July, Yibao has also implemented price increases for its bottled water products. The report suggests that as a leading player in packaged water, CR BEVERAGE possesses strong brand and channel competitiveness. This price hike is seen as helping to alleviate cost pressures, restore gross margins, and potentially improve market competition dynamics, thereby aiding the recovery of packaged water profitability and laying the groundwork for future operational improvements.
Operational Reforms and Growth Prospects
Following the appointment of new management, the company has been advancing operational reforms, restructuring into eight major business zones to enhance market responsiveness. On the channel front, efforts are focused on flattening the distribution structure, boosting direct sales capabilities, and strengthening presence in foodservice, household, and snack retail channels. Regarding products, a dual-driver strategy of "water + beverages" is in place, with ready-to-drink tea, functional beverages, and juices expected to increase the beverage segment's revenue contribution. The report believes the company's reform direction is clear. If organizational vitality continues to be unleashed, market share in the packaged water business is likely to recover, while the beverage segment could open up a significant second growth engine.
Financial Outlook and Shareholder Returns
Looking ahead to 2026, the report anticipates the company will focus on restoring growth in packaged water while accelerating the development of its beverage business. Given a relatively low base, rapid growth is achievable, with reform effects expected to become visible and profitability likely to rebound. From a capital markets perspective, the company previously announced a three-year dividend plan for 2026-2028, with an annual dividend per share of no less than 0.37 yuan. It has also initiated a share buyback program of up to 530 million Hong Kong dollars. Calculations based on the minimum dividend and maximum buyback amount suggest a potential H-share dividend yield of approximately 8.8% (based on the closing price as of June 30, 2026), which would provide ongoing returns for shareholders.
Potential Risk Factors
Risks include slower-than-expected new product adoption, significant increases in raw material costs, intensifying industry competition, food safety-related public sentiment issues, changes in consumer demand, and channel-related risks.
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