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农夫山泉(09633.HK)2023年报点评报告:2023年完美收官 茶饮料板块高歌猛进

Nongfu Spring (09633.HK) 2023 Annual Review Report: 2023 Ends Perfectly, Tea and Drink Sectors Make Great Progress

國海證券 ·  Mar 31

Incidents:

On March 26, 2024, Nongfu Spring released its 2023 annual report. In 2023, it achieved operating income of 42,667 billion yuan, +28.4% year-on-year; net profit to mother was 12.079 billion yuan, +42.2% year-on-year. Among them, the second half of 2023 achieved operating income of 22.205 billion yuan, +33.44% year over year, and realized net profit to mother of 6.304 billion yuan, +62.19% year over year.

Investment highlights:

Packaged water is growing steadily, and tea drinks are booming. In 2023, the company continued to consolidate its leading position in the packaged water industry and achieved breakthrough growth in tea and beverages, further consolidating the packaged drinking water and beverage cooling engine pattern. Specifically: 1) Packaged drinking water: In 2023, the company's drinking water achieved revenue of 20.062 billion yuan, +10.9%. The company increased its promotion of high-quality water sources and launched advertisements on the theme of the four water sources of Changbai Mountain, Mount Emei, Mount Taibai, and Wanlu Lake, highlighting the differences between the company's natural high-quality water sources and products, and achieved steady growth in the context of a high base. Product-side companies upgraded to 4L products in the second half of 2023 to meet the usage needs of different consumers. 2) Tea drinks:

In 2023, the company achieved revenue of 12.659 billion yuan, +83.3% year-on-year. Among them, the 2023H2 tea drink revenue increased significantly compared to the first half of the year. The rapid growth of Oriental Leaf was mainly due to the rapid development of the sugar-free tea industry and the company's brand cultivation for more than 10 years. We expect that the rapid expansion of the number of outlets at the same time will further boost Oriental Leaf's rapid growth in sales scale. 3) Functional drinks: In 2023, the company's functional drinks achieved revenue of 4.902 billion yuan, +27.7%. Consumer awareness of functional drinks continued to increase after the pandemic. We expect that with the expansion of the industry, the company “Scream” and “Power Emperor” will continue to benefit from good card slots. 4) Juice: In 2023, the company's juice drinks achieved revenue of 3,533 billion yuan, +22.7% year-on-year. During the reporting period, the company's 17.5° juice brand launched freshly squeezed orange juice during the production season, making a further breakthrough in freshness. The NFC series further enriched the product matrix by introducing large bottles.

With the rapid increase in revenue, the level of net interest rate has further increased. In 2023, the company achieved a gross profit margin of 59.55%, compared to +2.10pct. We expect the increase in gross margin mainly due to the decline in the prices of raw materials such as packaging materials and PET. In 2023, the company's sales, management, and financial expense ratios were 21.76%, 5.07%, and 0.23%, respectively, compared to -1.77pct/-0.45pct/+0.00pct. The significant optimization of the cost ratio is expected mainly due to: 1) changes in the company's product structure, the share of tea drinks with high profitability will increase; 2) supply chain cost optimization. In 2023, the company achieved a net profit margin of 28.31%, +2.75pct year-on-year, and its profitability reached a new high since listing.

Profit forecast and investment rating: The company is deeply involved in packaging natural water, adhering to innovation, long-term principles, and actively expanding categories. In view of the outstanding performance of the company's tea drink business and the rapid expansion period of the sugar-free tea business, we raised the company's profit forecast. The EPS for 2024-2026 is expected to be 1.26/1.42/1.61 yuan, respectively, and the corresponding PE is 31/27/24X, maintaining a “buy” rating.

Risk warning: 1) Raw material prices fluctuate; 2) New product launches fall short of expectations; 3) Channel expansion falls short of expectations; 4) Brand sentiment affects sales; 5) Online expansion falls short of expectations.

The translation is provided by third-party software.


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