GTHT has released a research report maintaining its earnings per share (EPS) forecasts for NONGFU SPRING (09633) at RMB1.35, RMB1.62, and RMB1.91 for 2025-2027. Based on a 35x P/E ratio (2025E), the target price is set at HK$51.92 per share (using an exchange rate of HK$0.91 to RMB). The "Overweight" rating is reiterated, supported by expectations of strong performance in 2H25 due to peak season sales, a low base effect, and favorable PET bottle chip prices. Key insights from GTHT are as follows:
**Peak Season Sales + Low Base: Optimistic About Accelerated Revenue Growth in 2H** Beverage sales typically peak in Q3, historically driving stronger revenue growth in the second half. Data from 2022 and 2023 shows accelerated year-on-year revenue growth in 2H compared to 1H (2024 is excluded due to abnormal sales patterns caused by online incidents). In 1H25, revenue grew 15.6% YoY against a normalized base (8.36% growth in 1H24). With the low base effect and peak season demand, GTHT expects further acceleration in 2H, projecting full-year revenue growth above 15%.
**Favorable PET Bottle Chip Prices + Reduced One-Time Marketing Costs: Confidence in Profitability** PET bottle chips, a key raw material for beverages, have seen prices decline 11.24% YoY and 3.73% QoQ in 2H25 (as of December 17). This downward trend is expected to support gross margin expansion. Additionally, one-time marketing expenses related to the Paris Olympics promotion of NONGFU SPRING’s "Dongfang Leaf" product in 2H24 will not recur in 2H25, further bolstering profitability prospects.
**New Related-Party Transaction Caps Reflect Strong Product Demand Potential** On December 17, 2025, NONGFU SPRING disclosed a "Renewal of Continuing Connected Transactions" announcement, outlining procurement agreements with Yangshengtang Group for bottle caps (e.g., for "Scream" products), raw materials, and beverages. The annual caps for 2026-2028 are set at RMB434.5 million, RMB528.5 million, and RMB629.5 million, respectively. Based on actual transactions of RMB322.8 million in the first 10 months of 2025, the YoY growth rates for the caps are projected at 34.60%, 21.63%, and 19.11%. GTHT views this robust growth as indicative of strong future demand for certain downstream products.
