The Zhitong Finance App learned that CICC released a research report stating that it maintains the “outperform the industry” rating of Chinese food (00506), with a profit forecast of 74/8 million yuan for 2023/24, with a target price of HK$3.8, corresponding to an upward space of 29%. The company's 2022 performance was in line with the bank's expectations, with net profit of 660 million yuan, +15.3% year on year. 2H22 sales continued to grow steadily, and profitability performance was good.

The bank expects that the company is expected to maintain steady growth in the number of units in 2023, mainly considering the overall benefits brought by the recovery in consumption scenarios, and that soft drink sales are expected to return to the upward trajectory after the impact of price increases stabilizes, while the increase in sleekcan share and continued specification segmentation are expected to provide steady revenue growth; juice is also expected to continue to grow well, driven by new products. Other products such as coffee and energy drinks also have great potential for development.

Furthermore, on the channel side, the company has expanded 1 million new outlets in the past 2 years (1.6 million outlets in the same period in 2020). The bank expects that there is still considerable room for a considerable increase in the output of newly developed networks to support revenue growth. The company expects that the cost side of 1H23 may be under slight pressure, mainly due to the low base due to 1H22's successful price lock, and recent fluctuations in sugar prices. The company may moderately reduce promotions to hedge against fluctuations in raw material prices. If the cost rate continues to be steady, it is expected that the company's profitability will remain at a level similar to that of 2022.