02460 Overview

China's Consumption Outlook: CLSA predicts that China's overall consumption will remain under pressure in 2026, with some potential for a rebound, particularly in the baijiu segment due to relaxed policies.

Market Preferences: The broker favors sectors with rebound potential like baijiu, as well as those with strong growth resilience, including beverages, pet food, and education.

Company Insights: CR BEVERAGE is identified as having rebound potential this year, while companies with higher growth or strong earnings are expected to be favored by the market.

Top Stock Picks: CLSA's top stock recommendations include WULIANGYE, New Oriental Education & Technology, CR BEVERAGE, and CHINA PET, all rated as Outperform with specified target prices.

UBS Engagement with CR BEVERAGE: UBS recently interacted with CR BEVERAGE's management, discussing their outlook for the second half of 2025 and 2026, highlighting the impact of price competition on packaged drinking water.

Earnings and Revenue Forecasts: UBS has reduced its earnings forecasts for CR BEVERAGE for 2025-2027 by 14-17% and revenue forecasts by 4-5%, while also lowering the target price from $11.7 to $10.75, maintaining a Neutral rating.

Sales and Profit Margin Decline: CR BEVERAGE's 1H25 sales and profit margins were negatively impacted by increased market investment and channel adjustments, with a projected 34% YoY decline in net profit for 2025 to RMB1.07 billion.

Target Price Adjustment: BofAS has reduced CR BEVERAGE's target price from HKD14.2 to HKD13.7, maintaining an Outperform rating, while anticipating a recovery in sales volume for bottled water in the future.

Financial Performance: CR Beverage reported a significant decline in 1H25 revenue and net profit, down 18.5% and 29% year-over-year, respectively, aligning with its profit warning. However, a narrowing of annual revenue decline is anticipated due to a low base in 2H24 and positive sales growth in July-August.

Future Outlook: CMBI has reduced its target price for CR Beverage by 41% to $12.85, reflecting ongoing profit pressures, while maintaining a Buy rating. The company is expected to benefit from output expansion and channel reform, with positive impacts anticipated in FY2026 or beyond.

CR BEVERAGE Financial Performance: CR BEVERAGE reported a significant decline in 1H25 revenue and net profit after tax, dropping 18.5% and 28.5% year-over-year, respectively, which was below expectations due to increased competition and unfavorable market conditions.

Analyst Revisions: BofA Securities has reduced its EPS estimates for CR BEVERAGE for 2025-26 by 16% and 20%, while CMBI has lowered the target price from HKD 13.3 to HKD 11.8, maintaining a Neutral rating.

Southbound Fund Inflows: Morgan Stanley reports that all 27 major Hong Kong consumer stocks monitored experienced net inflows from southbound funds in July, with an average increase of 0.8 percentage points in southbound holdings month-over-month.

Stock Performance Overview: While 27 stocks saw inflows, 38 recorded outflows; notable inflows were seen in CR BEVERAGE and XIAOCAIYUAN, while CHINA RES BEER and SAMSONITE faced significant outflows. Year-to-date, 41 stocks have had inflows compared to 25 with outflows.