NONGFU SPRING(9633.HK):REGAINING MARKET SHARE FOR PACKAGED DRINKING WATER TAKES TIME
NONGFU SPRING(9633.HK):REGAINING MARKET SHARE FOR PACKAGED DRINKING WATER TAKES TIME
Nongfu Spring's 1H24 revenue increased by 8.4% YoY to RMB 22.17bn and net profit grew by 8.0% YoY to RMB 6.24bn, despite sales of packaged drinking water products plunging 18% YoY due to online rumours and intense market competition. Notably, tea beverage segment delivered robust growth of 50% YoY, more than offsetting the deterioration in water segment. Influenced by promotional activities and unfavourable raw material prices, GPM also dropped by 1.4ppts YoY in 1H24. While the newly launched purified water product exerts margin pressure in the short term, we believe it will help Nongfu Spring regain market share. We remain positive about the long-term prospects of Nongfu Spring, in view of its continuous product innovation and superior profitability. As evidenced by recent sales, we expect the price war in packaged drinking water industry to ease in 2025. Maintain BUY.
農夫山泉的2024年上半年營業收入同比增長8.4%至人民幣221.7億元，淨利潤同比增長8.0%至人民幣62.4億元，儘管包裝飲用水產品銷量因網上謠言和激烈市場競爭而同比下跌18%。值得注意的是，茶飲料部分同比增長50%，大大抵消了水產品部分的惡化。受促銷活動和不利原材料價格影響，2024年上半年毛利率也同比下降1.4個百分點。儘管新推出的純淨水產品會在短期內對利潤率造成一定壓力，但我們認爲這將有助於農夫山泉重新奪回市場份額。鑑於其不斷創新的產品和優越的盈利能力，我們對農夫山泉的長期前景保持樂觀。通過近期銷售表現，我們預計包裝飲用水行業的價格戰將在2025年有所緩解。維持買入。
Key Factors for Rating
評級的關鍵因素
Nongfu Spring released lacklustre 1H24 results. Due to intense market competition, rumour attacks and subdued consumer sentiment, in 1H24, revenue increased by 8.4% YoY to RMB22.17bn, and NP grew by 8.0% YoY to RMB 6.24bn. By product category, the continued strong growth in tea beverage products (+59% YoY) more than offset the deterioration in packaged drinking water products (-18% YoY). The revenue growth of functional beverage products slowed down to 4% YoY while the juice beverage products recorded a robust 25% YoY increase, thanks to the return of classic products. The GPM dropped by 1.4ppts YoY to 58.8% in 1H24, mainly due to 1) promotion of the newly launched purified drinking water products, 2) rising share of fixed costs from lower packaged drinking water sales, and 3) price hike of raw materials for juice.
農夫山泉發佈了2024年上半年欠佳的業績。由於激烈的市場競爭、謠言攻擊和消費者信心不足，在2024年上半年，營業收入同比增長8.4%至人民幣221.7億元，淨利潤同比增長8.0%至人民幣62.4億元。按產品類別劃分，茶飲料產品持續強勁增長（同比增長59%），大大抵消了包裝飲用水產品的惡化（同比下降18%）。功能性飲料產品的營收增長放緩至同比增長4%，而果汁飲料產品卻因經典產品回歸而實現同比強勁增長25%。2024年上半年，毛利率同比下降1.4個百分點至58.8%，主要是由於1）新推出的純淨飲用水產品的促銷，2）固定成本佔比上升導致包裝飲用水銷售下降，以及3）果汁原材料價格上漲。
Launch of purified drinking water products to defend market position. While sales from packaged drinking water products increased 19% YoY in Jan- Feb, subsequent online rumours have curtailed the sales of this category dramatically over the following 4 months. To defend its market share, the company launched a purified drinking water product in large bundle with a lower price per bottle (RMB9.9/12 bottles) compared to its traditional natural water product, also with higher promotional efforts. Dragged by downward ASP, the OPM of packaged drinking water segment narrowed by 4.2ppts YoY to 32.2% in 1H24. According to the mgmt, Nongfu Spring began to regain market share sequentially in July and August, but expects the recovery of packaged drinking water to take some time. Thereby, we anticipate the company's margin pressure to linger in 2H24 and the fierce competition in packaged drinking water industry to only start easing in 2025.
推出純淨飲用水產品以保衛市場地位。雖然1月至2月包裝飲用水產品銷量同比增長19%，但隨後的網絡謠言大大抑制了這一類別在接下來的4個月內的銷售。爲捍衛市場份額，公司推出了一個大包裝的純淨飲用水產品，每瓶價格更低（9.9元/12瓶）比傳統的天然水產品，同時採取更多的促銷活動。受平均售價下降的拖累，包裝飲用水部分的營業利潤率在2024年上半年同比下降了4.2個百分點至32.2%。據管理層稱，農夫山泉從7月和8月開始逐步重新奪回市場份額，但預計包裝飲用水的恢復還需一段時間。因此，我們預計公司的利潤率壓力將在2024年下半年繼續存在，並且包裝飲用水行業的激烈競爭預計將在2025年開始緩解。
Achieving full year target challenging. The full year guidance of delivering double-digit growth across all four major categories appears difficult to fulfill, in view of tepid sales performance of packaged drinking water products. We now expect the group's revenue to increase by 10% YoY in 2024, despite a projected 15% decline in packaged drinking water sales. Nonetheless, we remain optimistic about the long-term prospects of Nongfu Spring, given continuous product innovation, deep channel penetration, leading market position, and better-than-peers profitability.
實現全年目標具有挑戰性。考慮到飲用水產品銷售疲軟的表現，完成四個主要類別全年率先增長的全年指導難以實現。儘管預計飲用水銷售將出現15%的下滑，但我們仍預計集團2024年的營業收入將增長10%。儘管如此，我們對農夫山泉的長期前景保持樂觀，因爲其持續的產品創新、深入的市場滲透、領先的市場地位以及超越同行業的盈利能力。
Key Risks for Rating
評級的主要風險
Downside risks: (i) commodity inflation; (ii) deteriorated brand equity; (iii) unsuccessful launch of new products; and (iv) intensified competition.
風險因素包括：（i）大宗商品通貨膨脹；（ii）品牌價值下降；（iii）新產品推出失敗；以及(iv)競爭加劇。
Valuation
估值
We revised down our 2024/25/26 core net profit forecasts by 4%/3%/3%, mainly to factor in lacklustre sales of packaged drinking water and weaker margins. Our new target price of HK$33.2 is derived from DCF with the following key assumptions: (1) WACC of 8.8% (previous: 8.5%), and (2) terminal growth rate of 3% (previous: 4.8%). Our TP is equivalent to 2024/25E P/E of 27.8x/24.0x.
我們將2024/2025/2026年核心淨利潤預測下調4%/3%/3%，主要是由於飲用水銷售疲軟和利潤率下降的因素。我們的新目標價爲33.2港元，是通過DCF得出，主要假設如下：（1）WACC爲8.8% （之前爲8.5%），以及（2）無窮長期增長率爲3% （之前爲4.8%）。我們的目標價相當於2024/2025年預測市盈率爲27.8倍/24.0倍。
譯文內容由第三人軟體翻譯。