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Nongfu Spring Co Ltd Class H Ordinary Shares 09633

Morningstar Rating
HKD 42.90 −1.50 (3.38%)
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Company Report

China Ready-To-Drink Sector: Diverging Performance but Nongfu Set To See Stronger Growth Than Tingyi

We revised our earnings forecasts for narrow-moat-rated Nongfu Spring and Tingyi after a fresh look at their growth outlook in the China ready-to-drink, or RTD, beverage market. We lifted our 2023-24 net income forecasts for Nongfu Spring by 9%-16% but lowered estimates for Tingyi by 6%-22%. Nongfu Spring has gained market share over peers including Tingyi in the RTD tea category, resulting in robust revenue growth in the second half of 2023. We expect Nongfu’s operating outperformance in this segment to continue in 2024. Tingyi, on the contrary, is set to face sales headwinds across the beverage and instant noodle categories.

Price vs Fair Value

09633 is trading at a 6% premium.
Price
HKD 44.40
Fair Value
HKD 89.00
Uncertainty
High
1-Star Price
HKD 49.30
5-Star Price
HKD 55.70
Economic Moat
Cqvjll
Capital Allocation
Dywqpmzwk

Bulls Say, Bears Say

Bulls

As consumers increasingly emphasize product safety, Nongfu Spring’s market leadership in the bottled water segment should be conducive to gaining share amid market consolidation.

Bears

The market growth potential of large-size packaged water in China may not be as large as it seems, as tap water remains the primary and most economic water source for households.

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News

Trading Information

Previous Close Price
HKD 44.40
Day Range
HKD 42.9043.65
52-Week Range
HKD 37.9546.75
Bid/Ask
HKD 42.90 / HKD 43.00
Market Cap
HKD 482.47 Bil
Volume/Avg
4.9 Mil / 3.8 Mil

Key Statistics

Price/Earnings (Normalized)
46.82
Price/Sales
11.94
Dividend Yield (Trailing)
1.73%
Dividend Yield (Forward)
1.73%
Total Yield
1.73%

Company Profile

Founded in 1996, Nongfu Spring is a major manufacturer of bottled water, ready-to-drink tea, juice and functional beverages in China. It holds the number-one share in the bottled water market; this segment contributed approximately 55% of the firm’s revenue and EBIT in 2022.
Sector
Consumer Defensive
Industry
Beverages - Non-Alcoholic
Stock Style Box
Large Growth
Total Number of Employees
20,000

Competitors

Valuation

Metric
09633
00322
00220
Price/Earnings (Normalized)
46.8216.1816.60
Price/Book Value
20.783.691.49
Price/Sales
11.940.540.62
Price/Cash Flow
38.157.238.57
Price/Earnings
09633
00322
00220

Financial Strength

Metric
09633
00322
00220
Quick Ratio
0.990.700.60
Current Ratio
1.080.840.82
Interest Coverage
143.548.1330.56
Quick Ratio
09633
00322
00220

Profitability

Metric
09633
00322
00220
Return on Assets (Normalized)
22.38%6.18%6.69%
Return on Equity (Normalized)
42.70%27.28%11.59%
Return on Invested Capital (Normalized)
35.73%10.53%8.95%
Return on Assets
09633
00322
00220
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