Nongfu Spring Co., Ltd. Class H (9633 – Research Report), the Consumer Defensive sector company, was revisited by a Wall Street analyst today. Analyst Miao Zhang from CMB International Securities maintained a Buy rating on the stock and has a HK$46.74 price target.
Miao Zhang has given his Buy rating due to a combination of factors influencing Nongfu Spring Co., Ltd. Class H’s future prospects. Despite the flat earnings in FY24, the company is poised for a recovery in FY25 with projected double-digit revenue growth. This anticipated growth is driven by a rebound in the packaged water segment, which is expected to recover market share, and sustained strong performance in the tea business, which has surpassed water as the primary revenue source.
Miao Zhang also highlights the potential of the juice segment to become a significant growth driver, alongside the company’s strategic overseas expansion starting in Hong Kong. The company’s leading position in the packaged water market and its growth potential in other beverage segments underpin the Buy rating. However, Zhang notes potential risks such as weak consumer sentiment, food safety issues, and rising raw-material costs, which could impact future performance.
In another report released on March 10, CLSA also upgraded the stock to a Buy with a HK$45.40 price target.