China Foods Limited (0506) AI Stock Analysis

• Market Cap: HK$11.75B
• Dividend Yield: 3.62%
• Average Volume (3M): 8.00M
• Price to Earnings (P/E): 12.5
• Beta (1Y): 0.29
• Revenue Growth: 10.05%
• EPS Growth: 9.01%
• Country: HK
• Employees: 17,533
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Beverages - Non-Alcoholic
• EPS (TTM): 0.23
• Shares Outstanding: 2,797,223,400
• 10 Day Avg. Volume: 2,983,214
• 30 Day Avg. Volume: 8,003,922
• PEG Ratio: 2.29
• Price to Book (P/B): 1.02
• Price to Sales (P/S): 0.31
• P/FCF Ratio: 3.17
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 74 Outperform
• Price Target: HK$5.00 ▲(16.28% Upside)

China Foods Limited's overall stock score is driven by its strong financial performance and reasonable valuation, balanced by technical indicators suggesting overbought conditions. The company's solid profitability and low leverage risk are significant strengths, but the decline in operating cash flow and potential overvaluation warrant caution.

Positive Factors

Balance Sheet Strength

Extremely low leverage and a solid equity base provide durable financial flexibility. Minimal debt reduces refinancing and interest risk, helping the company withstand downturns, fund capex or M&A from equity/cash, and preserve credit capacity over the medium term.

High Gross and Operating Margins

Relatively high gross and healthy operating margins indicate structural cost advantages or pricing power in its product mix. Sustained margin levels support reinvestment, dividend capacity and resilience to input-cost volatility, underpinning long-term profitability.

Diversified Revenue & Distribution

Multiple channels and product lines reduce concentration risk and increase market reach. An established distribution network and partnerships support stable demand, faster product rollouts, and durable revenue streams as consumer habits evolve across retail and online.

Negative Factors

Operating Cash Flow Weakness

A collapse of operating cash flow to zero is a structural red flag for liquidity and self-funding capacity. Without restored OCF management may need external financing for capex, inventory or dividends, raising execution risk and reducing long-term financial resilience.

Recent Revenue Stagnation

Near-zero top-line growth signals potential market saturation, increased competition, or execution challenges. Prolonged stagnation limits operating leverage, constrains margin expansion and reduces the firm's ability to fund strategic initiatives organically over the medium term.

Low Net Profit Margin

A single-digit net margin leaves limited buffer against cost inflation or pricing pressure. With modest bottom-line conversion, the company is more exposed to margin compression, which can impair free cash flow generation and reduce capacity for dividends or reinvestment.

China Foods Limited Business Overview & Revenue Model

Company Description

China Foods Limited, an investment holding company, manufactures, distributes, markets, and sells Coca-Cola series products in the People's Republic of China. The company offers sparkling drinks, juices, water, milk drinks, energy drinks, tea, coffee, functional nutrition drinks, sports and plant-based protein drinks, and alcoholic drinks. It is also involved in the production, sale, and distribution of beverage bottles; wholesale and retail of pre-packaged foods, and raw and auxiliary materials; provision of supply chain information consultation, management, and other services; and wholesale of packaged foods. In addition, the company provides enterprise management and consulting, business information consulting, and marketing planning services, as well as computer information system development, consulting, promotion, and other services. Further, it engages in the food business and internet sale of food. The company was formerly known as COFCO International Limited. China Foods Limited was founded in 1990 and is headquartered in Causeway Bay, Hong Kong. China Foods Limited is a subsidiary of China Foods (Holdings) Limited.

How the Company Makes Money

China Foods Limited generates revenue through multiple streams, including the sale of its branded food products, which encompass sauces, snacks, and other packaged foods. The company leverages its established distribution network to reach a broad customer base, including supermarkets, grocery stores, and food service establishments. Key revenue streams include direct sales to retailers, online sales, and partnerships with food service providers. Additionally, China Foods Limited may engage in strategic alliances with other companies to enhance its product offerings and expand its market reach, further contributing to its earnings.

China Foods Limited Financial Statement Overview

Summary

China Foods Limited shows strong financial health with consistent profitability and a stable balance sheet. The income statement highlights a healthy gross profit margin and operational efficiency, while the balance sheet reflects minimal leverage risk. However, the recent decline in operating cash flow is a concern that needs addressing.

Income Statement

China Foods Limited has demonstrated consistent revenue growth over the years with a healthy gross profit margin of 37.8% and a net profit margin of 4.0% for 2024. The EBIT margin stands at 8.7%, and EBITDA margin at 12.2%, indicating operational efficiency. However, the revenue growth rate from 2023 to 2024 is modest at 0.2%, suggesting potential challenges in accelerating top-line growth.

Balance Sheet

The company maintains a strong balance sheet with a low debt-to-equity ratio of 0.01, reflecting minimal leverage risk. The equity ratio is a solid 36.7%, indicating a strong equity base relative to total assets. Return on Equity (ROE) is robust at 13.3%, showcasing effective utilization of shareholder funds.

Cash Flow

Cash flow analysis shows some concerns, as operating cash flow has dropped to zero in 2024. Historical free cash flow was positive, but the absence of current data prevents a complete assessment. The company should focus on restoring operating cash flow to sustain its financial health.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	22.43B	21.49B	21.45B	20.97B	19.78B	17.25B
Gross Profit	8.88B	8.12B	7.54B	7.50B	7.06B	6.83B
EBITDA	2.74B	2.61B	2.52B	2.19B	1.89B	1.81B
Net Income	873.15M	860.53M	832.58M	659.84M	572.41M	498.73M
Balance Sheet
Total Assets	18.75B	17.60B	16.23B	15.06B	15.17B	15.11B
Cash, Cash Equivalents and Short-Term Investments	5.06B	4.02B	2.55B	1.11B	1.68B	1.90B
Total Debt	78.34M	85.58M	79.38M	57.71M	77.23M	110.47M
Total Liabilities	8.60B	7.40B	6.54B	6.20B	6.78B	7.03B
Stockholders Equity	6.61B	6.46B	6.02B	5.52B	5.16B	4.95B
Cash Flow
Free Cash Flow	2.37B	2.07B	1.80B	259.17M	360.41M	1.65B
Operating Cash Flow	3.09B	2.85B	2.43B	1.14B	1.07B	2.21B
Investing Cash Flow	-622.86M	-560.83M	-564.43M	-851.23M	-846.64M	-374.88M
Financing Cash Flow	-1.08B	-564.93M	-609.65M	-844.13M	-496.06M	-813.82M

China Foods Limited Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 4.30
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:0506, the sentiment is Negative. The current price of 4.3 is above the 20-day moving average (MA) of 4.26, below the 50-day MA of 4.31, and above the 200-day MA of 3.75, indicating a neutral trend. The MACD of -0.03 indicates Negative momentum. The RSI at 47.63 is Neutral, neither overbought nor oversold. The STOCH value of 48.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HK:0506.

China Foods Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
0506	74 Outperform	HK$11.75B	12.49	13.57%	3.62%	10.05%	9.01%
0220	71 Outperform	$33.56B	14.34	17.10%	5.64%	8.19%	23.16%
1475	67 Neutral	HK$7.57B	36.41	5.55%	1.41%	7.29%	-33.19%
9633	63 Neutral	HK$528.36B	36.26	46.45%	1.73%	4.14%	7.35%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
0345	58 Neutral	HK$7.30B	31.52	7.63%	2.21%	-3.39%	91.63%
1117	55 Neutral	HK$12.63B	-5.57	-21.76%	0.86%	-2.69%	-695.87%

China Foods Limited Corporate Events

China Foods Limited Optimizes Financial Management with New Cash Pooling Agreement

China Foods Limited has entered into a Cash Pooling Management Agreement with COFCO Finance (HK) to enhance financial management and fund utilization efficiency. This agreement, effective from November 10, 2025, for three years, involves COFCO Finance (HK) managing the company’s funds centrally, which will help reduce financing costs and risks. The arrangement is considered a continuing connected transaction under Hong Kong’s Listing Rules, requiring reporting and announcement due to its financial implications.

The most recent analyst rating on (HK:0506) stock is a Buy with a HK$4.50 price target. To see the full list of analyst forecasts on China Foods Limited stock, see the HK:0506 Stock Forecast page.