Major bank rating | Citigroup: Downgrades Vitasoy's Target Price to HKD 9.4, remains cautious about its short-term sales performance.

On June 25, Gelonghui reported that Citi issued a research report indicating that VITASOY INT'L's net income for the fiscal year 2025 is 4% lower than the bank's forecast. Considering the performance for the second half of the fiscal year 2025 and the pressure from intensified competition in mainland China, Citi has lowered its sales and net income forecasts for VITASOY for the fiscal years 2026 to 2027 by 5% and 17% respectively, and adjusted the Target Price from HKD 9.6 to HKD 9.4, maintaining a "Hold" rating. The report noted that Citi observed intensified competition in the mainland beverage Industry, with several leading companies implementing marketing campaigns and offering lottery activities, allowing customers to repurchase products at extremely low prices (for example, HKD 1 to 2 per bottle). VITASOY stated that it does not intend to further reduce prices after lowering the price of VITASOY tea by 10% to 15% in response to competition in the second half of the fiscal year 2024, and plans to expand market share through improving execution, innovation, and distribution. Citi pointed out that although the strategy seems to have long-term prospects, it requires time, thus maintaining caution regarding its short-term sales performance.