Nongfu Spring (9633.HK) typically releases financial results semi-annually (interim and annual reports) in the Hong Kong stock market and does not publish official quarterly reports. The following is the summary of the company’s latest announced full-year financial results for fiscal year 2025:
Core Financial Metrics
- Revenue: RMB 525.53B, up 22.5% YoY, surpassing the RMB 50B milestone for the first time.
- Net Profit: RMB 158.68B, up 30.9% YoY, with net profit growth outpacing revenue growth.
- Gross Profit Margin: Increased from 58.1% in the same period last year to 60.5%, primarily driven by declining raw material costs such as PET and optimization of channel management.
- Selling and Distribution Expenses: RMB 98.00B, up 6.8% YoY, with its proportion of total revenue decreasing to 18.6%.
- Basic Earnings Per Share (EPS): RMB 1.411, up 30.9% YoY.
- Dividend: Proposed final dividend of RMB 0.99 per share.
Product Structure and Business Highlights
- Tea Beverages Become the Largest Revenue Source: Driven by Oriental Leaf and Tea π, tea beverage revenue experienced a substantial growth of 29% to RMB 216.00B, accounting for 41.1% of total revenue and overtaking the traditional packaged drinking water business.
- Packaged Drinking Water Business: Revenue reached RMB 187.11B. Despite intense market competition, the company protected its overall profit margins by controlling low-price e-commerce channels and stabilizing the offline distributor pricing system.
- Other Beverage Segments: Functional beverages (Red Bull, Scream, etc.) generated RMB 57.60B; juice beverages generated RMB 51.80B; other products generated RMB 13.10B. All core product categories achieved double-digit growth.
Future Outlook and Strategic Adjustments
- 2026 Operational Outlook: Management expects sales to maintain double-digit growth in 2026 and aims to restore packaged water sales to 2023 levels or higher.
- Production Capacity and Water Source Investment: The company reallocated a portion of its IPO proceeds, shifting funds originally designated for “infrastructure base construction” toward “acquisition of production facilities and construction of new plants.” The utilization period for the remaining IPO proceeds has been extended to the end of 2027 to secure room for continuous investments in water sources and tea supply chains.
The following is the translation of the previous response regarding the key changes, next phase outlook, and next-year EPS projections for Nongfu Spring (9633.HK) based on its latest financial disclosure:
Key Changes in the Recent Period
- Historic Reversal in Revenue Structure: The tea beverage business (Oriental Leaf, Tea π) accelerated significantly in the second half of 2025, with H2 revenue growth reaching 38%, far outperforming the 20% growth in H1. This brought full-year tea beverage revenue to RMB 21.6B, officially overtaking traditional packaged drinking water to become the company’s largest revenue source.
- Significant Recovery in Packaged Water: The packaged water business bounced back from its H1 trough, with H2 revenue surging 25% YoY (compared to low single-digit growth or decline in H1), bringing full-year revenue back up to RMB 18.711B. The operating profit margin for the water business also rebounded sharply to 39.4% in H2 from 35.4% in H1.
- Margin Expansion and Cost Optimization: Full-year gross profit margin expanded to 60.5%, primarily driven by lower costs for major raw materials such as PET plastics, alongside the company’s deliberate efforts to control low-price e-commerce channels and stabilize the offline distributor pricing system. Concurrently, selling and distribution expenses as a percentage of revenue fell to 18.6% post-Olympics, driving net profit growth (+30.9%) to significantly outpace revenue growth (+22.5%).
Next Quarter and Phase Outlook
As Nongfu Spring only publishes semi-annual and annual reports, its official outlook is benchmarked against the first half (H1) and the full year of 2026:
- Revenue Target Remains Double-Digit: Management reiterated during the earnings call that the full-year sales target for 2026 remains at double-digit growth, with a dedicated focus on driving packaged water sales fully back to 2023 peak levels or higher.
- Margin Outlook Faces Uncertainty: Despite hitting record margins in 2025, management did not provide specific gross margin or net margin guidance for 2026. The market anticipates that margins will face dual pressure from intense competition and cost fluctuations in 2026, as the sugar-free tea market becomes highly competitive (the tea beverage operating margin already ticked down by 0.6% in H2 2025) and geopolitics potentially impact raw material prices like PET.
- Reallocation of Capacity Strategy: The company extended the utilization period of its IPO proceeds to the end of 2027 and shifted its focus toward acquiring production facilities and building new factories, preparing for long-term supply chain competition in water sources and tea production lines.
Future One-Year (FY2026) EPS Forecasts
According to the latest sell-side consensus estimates from institutions such as CMBI and Bloomberg:
- FY2025 Actual EPS: RMB 1.41 (up 30.9% YoY).
- FY2026 Forecast EPS: Market consensus expectations fall between RMB 1.55 and RMB 1.57, representing a projected YoY growth of approximately 10% to 11.5%.
- Growth Momentum Assessment: Analysts believe that as the base effect normalizes in 2026, the company will transition from a high-growth phase back to a normalized growth trajectory, with revenue and net profit compound annual growth rates (CAGR) expected to stay around 11% over the next three years.
The following is a comprehensive investment analysis of Nongfu Spring (9633.HK) from a fundamental and technical perspective, referencing the latest sell-side analyst reports.
Analyst Expectations and Potential Upside/Downside Ratios
According to the latest sell-side consensus from institutions such as Bloomberg, China Merchants Securities, Citi, and CMBI:
- Consensus Target Price: Around HKD 55.65
- Bull Case (Upside Target): Citi, Haitong International, and China Merchants Securities have raised their target prices to between HKD 55.00 and HKD 60.88. Based on an optimistic target of HKD 59.00, the potential upside is approximately 37.8%.
- Bear Case (Downside Target): Foreign brokerages like Macquarie remain conservative with a Sell rating and a target price of HKD 37.00. UBS also maintains a Sell rating with a target price of around HKD 41.60. If the stock drops to the low of HKD 37.00, the potential downside is approximately 13.5%.
Overall, the market consensus suggests that the downside risk is relatively manageable, offering an attractive risk-reward profile.
Fundamental Analysis
Upside Drivers:
- Dual-Engine Growth Model Established: Sugar-free tea beverages (Oriental Leaf, Tea π) have successfully taken over the growth baton from packaged water. Revenue growth for the tea segment accelerated to 38% YoY in H2 2025, becoming the cornerstone of company revenue and profit. China Merchants Securities points out that benchmarking against the Japanese sugar-free tea market, Oriental Leaf has the potential to become a RMB 50B mega-product in the future.
- Recovery in Packaged Water: Packaged water revenue rebounded 25% YoY in H2 2025, with its operating margin recovering to 39.4%. This indicates that the strategy to control low-price e-commerce channels and stabilize offline pricing has proven effective, allowing the company to move past the 2024 public relations and price war crises.
- High Dividend Payout Providing Downside Protection: The company proposed a final dividend of RMB 0.99 per share (approximately HKD 1.13), representing a 70% dividend payout ratio. Based on the current stock price, the dividend yield stands around 2.6%. Robust cash flows and high payout ratios attract defensive, long-term institutional capital in the current market environment.
Downside Risks:
- Intense Industry Competition: The sugar-free tea market enters a highly competitive red ocean phase, with major FMCG players aggressively launching new products. Nongfu Spring’s tea beverage operating margin ticked down by 0.6% in H2 2025, showing that maintaining peak margins is becoming increasingly challenging.
- Cost Side Uncertainty: Geopolitically driven crude oil volatility could push up the costs of core packaging materials like PET plastics. Management did not provide specific margin guidance for 2026 during the latest AGM, fueling market concerns over whether gross margins have peaked.
- Premium Valuation Facing Correction: The stock currently trades at a trailing price-to-earnings (PE) multiple of around 26x. Compared to the average PE of 11x to 15x for traditional consumer staples in Hong Kong and A-share markets, Nongfu Spring enjoys a high premium. If FY2026 EPS growth normalizes to 10% to 11%, the market may de-rate its valuation multiple.
Technical Analysis
- Trend and Moving Average Structure: The stock price has vibrated lower from its 2025 high of around HKD 56.00, correcting nearly 9% over the past 90 days, and has recently been seeking support in the HKD 41.80 to HKD 43.00 range. The moving averages are currently showing a sideways, overlapping consolidation pattern. Short-term 50-day and 200-day moving averages are capping the upside, indicating that momentum is still in a bottoming-out phase.
- Key Support and Resistance Levels:
- Strong Support Level: The 52-week low at HKD 32.45 serves as a historical-grade bottom. The medium-term key support rests in the HKD 37.00 to HKD 38.50 range, which is a major cluster for buyers and aligns with the target prices of bearish analysts.
- Short-Term Resistance Level: HKD 46.00 to HKD 47.80 (the rebound peak). A volume-backed breakthrough above this zone would open up upside room to challenge the psychological milestone of HKD 50.00.
- Institutional Shareholding and Seasonal Catalyst: Large institutions such as BlackRock and Vanguard maintained stable shareholding percentages through the spring. As the peak summer beverage consumption season approaches, the pace of offline channel destocking and sales feedback from new products will serve as the technical catalysts to reverse the sluggish trend and trigger an upside breakout.
Source:
- https://www.hkexnews.hk/
- https://www.bloomberg.com/
- https://www.cmschina.com/
- https://www.citigroup.com/
- https://www.cmbi.com/
- https://www.macquarie.com/
- https://www.ubs.com/
Back to Nongfu Spring page