FY25：强茶与果汁业务强劲；面临挑战以维持高速增长

facing challenges to maintainhigh growth FY25:Strong tea & juice biz; facing challenges Target PriceHK$60.88(Previous TPHK$57.75)Up/Downside31.1%Current PriceHK$46.42 Nongfu Spring’sFY25 revenuewasup 22.5% YoY to RMB 52.6bn, 4% aboveBloomberg consensus, and net profitwasup 30.9% YoY to RMB 15.9bn,beatBloomberg consensusby6%, supported by recovery in waterbiz, stronger-than-expected tea and juice results especially in 2H25, andsignificant SG&A declineposttheOlympic year. The company retained its FY26 double-digit revenuegrowth target but offered no gross marginor net profit guidance amid uncertainconditions. We forecast its 3-year forward(2026-28E)revenue and earningsCAGR at around 11%.Maintain BUYandraiseTPby5%to HK$60.88basedon:1) valuationbase rolledforwardto2026Efrom 2025E;2)target P/E multiplecut20%to 32x reflecting concerns over intensified competition and China Consumer Staples Miao ZHANG(852) 3761 8910zhangmiao@cmbi.com.hk Two cornerstonebusinessesshowedstrong growth amid intensifyingcompetition.1) Teabiz: Strong growth, deepening competition. SegmentFY25revenue+29%YoY(2H25+38%vs.1H25’s 20%,notablyaccelerating), driven by sugar-free tea’s scale expansion.Segment OPmargin +2.9ppt to 48.0%in FY25, but2H25margindown 0.6ppt vs. 1H25, Juicebusinessisscaling up. Juicebizrevenuegrew27% YoY to RMB5.2bn, with 2H25 growth accelerating to 33% from 21% in 1H25, driven byrising consumer health awareness. Segment OP margin rose 9.4ppt to34.3% in FY25 (driven by mix shift and scale effects), with 2H25 up from1H25's 31.3% to 37.3%. As consumer pursuit of dietary health grows, the MaintainBUY.TPraised5% to HK$60.88given 1) valuation base changeto 2026E from 2025E;2)target P/E multiple cutby20%to 32xtoreflectpost-strong-performance concernson fundamentals, including 1) intensifiedcompetition in packaged water/beverage sector in 2026, and2) potentialcost pressure from PET/raw material price volatility due to geopolitics,posing challenges to sustaining high growth post stellar FY25 results; as wellastrading sentiment:1) 9.4% post-earnings stock surge may have fully Source: FactSet Source:Company data,Wind,CMBIGMestimates(as of 25 Mar 2026) Disclosures& Disclaimers AnalystCertification The research analyst who is primary responsible for the content of this research report, in whole or in part, certifies thatwith respect to the securities or issuerthat the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, theanalyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Kong listed companies covered in thisreport; and (4) have any financial interests in the Hong Kong listed companies covered in this report.CMBIGM Ratings : Stock with potential return of over 15% over next 12 months: Stock with potential return of +15% to-10% overnext 12 months: Stock with potential loss of over 10% over next 12 months: Stock is not rated byCMBIGM BUYHOLD :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expected to perform in-line with the relevant broad market benchmark over next 12 months:Industry expected to underperform the relevant broad market benchmark over next 12 months Important Disclosures There are risks involved in transacting in any securities. The information contained in this report may not be suitable forthe purposes of all investors.CMBIGMdoes not provide individually tailored investment advice. This report has been prepared without regard to the individual investment objectives, financial positionor special requirements. Past performance has no indication of future performance, and actual events may differ materially from that which is contained in thereport.The value of, and returns from, any investments are uncertain and are not guaranteed and may fluctuate as a result of their dependence on the or its affiliate(s) to whom it is distributed. This report is not and should not be construed as an offer or solicitation tobuy or sell any security or any interest insecurities or enter into any transaction.NeitherCMBIGMnor any of its affiliates,shareholders, agents, consultants, directors, officers or employees shall beliable for any loss, damage or expense whatsoever, whether direct or consequential, incurred in relying on the information contained in this report.Anyonemaking use of the information contained in this report does so entirely at their own risk. CMBIGMhas exerted everyeffort in its capacity to ensure, but not to guarantee, their accuracy, completeness, timeliness or correctness.CMBIGMprovidesthe information, advices and forecasts on an "AS IS" basis.The information and contents are subject to chang