20260828-招银国际-华润饮料-02460.HK-Pains_from_reform_run_deeper_than_expected_longer_time_required_for_recovery_6页_1mb

CR Beverage (2460 HK) Summary

Core Content

CR Beverage (2460 HK) is undergoing significant restructuring efforts that are impacting its financial performance. The company's first-half of 2026 (1H26) revenue fell by 12.1% to RMB5,455 million, primarily due to a 7.9% decline in packaged water revenue and a 35.4% contraction in the beverage segment. Despite these challenges, the company managed to expand its gross margin by 0.9 percentage points to 47.6%, exceeding market expectations.

The net profit (NP) for 1H26 dropped by 26.4% YoY to RMB592 million, mainly due to operating deleveraging and an increase in the SG&A ratio. The company is currently in a phase of reform, which has caused deeper-than-expected disruptions, delaying the return to growth. As a result, the target price (TP) has been revised down by 14% to HK$9.57, while the target PE multiple remains at 20x.

Main Points

• Revenue Decline:

  • 1H26 revenue fell 12.1% YoY to RMB5,455 million.
  • Packaged water revenue declined 7.9% YoY to RMB4,838 million.
  • Beverage segment revenue dropped 35.4% YoY to RMB617 million.

• Gross Margin Expansion:

  • Gross margin increased to 47.6%, surpassing market expectations.
  • This was achieved through cost management strategies including early PET price-locking, shrink-wrapped packs penetration, logistics optimization, and small-batch procurement.

• Reform Progress:

  • Headquarters restructuring: 10 departments merged and headcount reduced by ~40% in 1H26.
  • Channel restructuring: Distributor self-operation ratio increased by 10ppt, e-commerce revenue mix at ~10%, and instant retail water sales volume doubled.
  • R&D investment increased by 74.6% YoY to RMB25.8 million in 1H26.

• Earnings Outlook:

  • FY26E revenue is revised down by 14-15% compared to previous estimates.
  • FY26E NP is revised down by 13.8%.
  • The company is expected to reach an earnings trough in FY26E, with an inflection point for reform payoffs anticipated in the future.

• Valuation:

  • The stock currently trades at a 15.2x 2026E PE, which is its historical low.
  • The target price remains at HK$9.57, based on a 20x 2026E PE.

• Financial Performance:

  • Revenue for FY24A to FY28E shows a mixed trend with declines in early years followed by a gradual recovery.
  • Net profit is expected to grow in the long-term, with FY28E projected at RMB1,259 million.
  • EPS is expected to increase from 0.42 in FY25A to 0.52 in FY28E.

• Share Performance:

  • The stock has seen a 25.2% decline in the 6-month period.
  • Dividend yield is around 5.6% for FY26E, with a payout ratio of 92%.

Key Information

• Target Price: HK$9.57 (revised down by 14% from previous estimate).
• Target PE Multiple: 20x.
• Earnings Trajectory:
  • FY24A: RMB10,530 million.
  • FY25A: RMB11,210 million.
  • FY26E: RMB11,811 million.
• Net Profit Trajectory:
  • FY24A: RMB1,016 million.
  • FY25A: RMB1,162 million.
  • FY26E: RMB1,259 million.
• Dividend Yield: 5.6% for FY26E.
• Payout Ratio: 92%.
• Shareholding Structure:
  • CRH Beverage Ltd.: 50.0%.
  • Plateau Consumer Ltd.: 33.4%.

Risks

• Macro Weakness: Potential economic downturns may impact sales.
• Reform Slippage: Delays in the restructuring process may affect profitability.
• Cost Inflation: Rising costs could pressure margins.
• Food Safety: Regulatory and consumer risks related to product safety.

Analyst View

• Rating: BUY.
• Reasoning: Despite the short-term challenges, the company's structural measures are expected to support stable margins and long-term growth. The earnings trough is expected in FY26E, and the reform benefits are anticipated to materialize in the future.
• Outlook: The company is expected to recover gradually, with a focus on channel optimization and R&D investment. The stock is considered undervalued based on its current P/E ratio.