UPC Earnings: Beverage Segment Remains the Key Growth Driver; Maintaining Fair Value Estimate

No-moat Uni-President China’s 2024 revenue and net profit were moderately above our expectations. The beverage segment continued to be the key growth driver, with the top line slightly outpacing our estimates. Meanwhile, the net profit beat of 1.6% was primarily driven by a lower tax rate. We lift our 2025-27 earnings estimates by 1%-3% due to the lower tax rate, and our longer-term forecasts are largely unchanged. Consequently, we keep our fair value estimate of HKD 6.80 per share, implying 15 times 2025 P/E and 8 times enterprise value/EBITDA. While we see shares as overvalued, UPC still offers a 5.5% dividend yield for 2025. We expect UPC to maintain a dividend payout ratio of 100% over the next five years.