Maintain an “Overweight” rating. Maintaining the 2024-2026 EPS forecast of 6.55/8.12/9.96 yuan, +29%/24%/23% year over year, referring to Nongfu Spring, Yanjing Beer, Xiang Piaopiao and Chengde Lulu, the company was given a 2024 target PEG 1.47X, and the target price was raised to 274.22 yuan (previous value was 234.76 yuan).
By strengthening the frozen layout, sales are expected to be significantly boosted during the peak season. The company began to freeze terminals ahead of schedule in March 2024, and the compounding of the company's increasingly rich product matrix gradually increased its overall brand potential. We are optimistic that the company's sales will continue to boost as the peak season arrives.
The channel/product is two-wheel drive, and the main energy drink business is gradually nationalized. On the one hand, the company continues to increase the coverage of terminal outlets by strengthening control over dealers and increasing the number of dealers; on the other hand, the company's product side focuses on high cost performance, which conforms to the major trend of future affordable consumption. Therefore, driven by the two-wheel drive of the channel/product, we are optimistic that Dongpeng Specialty Drinks will continue to squeeze competitors, and is expected to gradually grow to 20 billion units with a large sales volume.
The volume of new electrolyte water products continues to be released, and it is expected to gradually grow into the second growth engine. As consumer health awareness increases, the electrolyte water industry, which has the effect of relieving fatigue and supplementing electrolytes, is gradually expanding. In this context, based on Dongpeng's past energy drink brand positioning and the high overlap between electrolyte water consumers (manual workers/sports people), we are optimistic that the electrolyte aquatic product “Rehydrate Bar”, which also has outstanding cost performance properties, will gradually be integrated into Dongpeng's channel, gradually breaking through in volume and becoming the second largest single product after energy drinks.
Risk warning: The effect of network expansion falls short of expectations, new product promotion falls short of expectations, etc.