Analyst

Steve

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nongfu-spring-co-ltd" target="_blank" data-smartkarma-citation="entities:28955:1" rel="noopener">Nongfu Spring (9633 HK)</a>'s valuation has come down to a much more reasonable 20x forward PE with expected net profit CAGR of 15% for the next 3 years.</li>
<li>The derating is largely due to the negative media portrayal of the company's Nongfu brand since February 2024, resulting in a -18% decline in its water business in 1H24. </li>
<li>Unsweetend tea business on the other hand has continued to shine, growing 59% yoy in sales in 1H24, while operating profit of the segment surged 63% yoy. </li>
</ul>



Nongfu Spring (9633 HK)'s valuation has come down to a much more reasonable 20x forward PE with expected net profit CAGR of 15% for the next 3 years.
The derating is largely due to the negative media portrayal of the company's Nongfu brand since February 2024, resulting in a -18% decline in its water business in 1H24. 
Unsweetend tea business on the other hand has continued to shine, growing 59% yoy in sales in 1H24, while operating profit of the segment surged 63% yoy. 


Nongfu Spring (9633 HK):  Trading At Below 20x Forward PE With 15% NP 3-Year CAGR

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>1H24, Nongfu’s revenue growth rate fell to 8% YoY, because Wahaha launched a propaganda against Nongfu.</li>
<li>We believe the revenue growth will rise in 2H24 and 2025, as it seems that the public do not like the way Wahaha use.</li>
<li>We set an upside of 26% and a price target at HK$38 for the end of 2025.</li>
</ul>


1H24, Nongfu’s revenue growth rate fell to 8% YoY, because Wahaha launched a propaganda against Nongfu.
We believe the revenue growth will rise in 2H24 and 2025, as it seems that the public do not like the way Wahaha use.
We set an upside of 26% and a price target at HK$38 for the end of 2025.


Nongfu Spring (9633 HK): 1H24 Impacted by Defamation, But Finally the Public with Nongfu

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

<ul>
<li>Giant Biogene was listed in Hong Kong IPO in 2022. It has done well since and is now trading 45% above its IPO price, but its still cheap.</li>
<li>GB is a leader in the bioactive ingredient-based professional skin treatment product industry in China.</li>
<li>In this note, we will talk about the company’s past performance and future prospects.</li>
</ul>


Giant Biogene was listed in Hong Kong IPO in 2022. It has done well since and is now trading 45% above its IPO price, but its still cheap.
GB is a leader in the bioactive ingredient-based professional skin treatment product industry in China.
In this note, we will talk about the company’s past performance and future prospects.


2024 High Conviction - Giant Biogene - Growth Rate Keeps Moving Higher

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nongfu-spring-co-ltd" target="_blank" data-smartkarma-citation="entities:28955:1" rel="noopener">Nongfu Spring (9633 HK)</a> has been trading flat since April 2021, even though earnings have grown 36% yoy in 2021, 19% yoy in 2022, and 25% yoy in 1H23.</li>
<li>We believe a forward PE lower than 35x would be a great entry price for Nongfu (37x currently), with upside potential in earnings from explosive growth in unsweetened tea.</li>
<li>A business that has a long run-way for growth, strong management, strengthening moat, great cash flow, and on top of that counter-cyclical, deserves a premium valuation anywhere in the world. </li>
</ul>



Nongfu Spring (9633 HK) has been trading flat since April 2021, even though earnings have grown 36% yoy in 2021, 19% yoy in 2022, and 25% yoy in 1H23.
We believe a forward PE lower than 35x would be a great entry price for Nongfu (37x currently), with upside potential in earnings from explosive growth in unsweetened tea.
A business that has a long run-way for growth, strong management, strengthening moat, great cash flow, and on top of that counter-cyclical, deserves a premium valuation anywhere in the world. 


Nongfu Spring (9633 HK):  Within Striking Distance

<ul>
<li>We believe the criticism against Nongfu Spring will eventually help the company.</li>
<li>Catching the trend of sugar free, tea revenue surged by 83% in 2023.</li>
<li>The company achieved higher growth and higher margin, but its stock price is still flat.</li>
</ul>


We believe the criticism against Nongfu Spring will eventually help the company.
Catching the trend of sugar free, tea revenue surged by 83% in 2023.
The company achieved higher growth and higher margin, but its stock price is still flat.


Nongfu Spring (9633 HK): Criticism Not a Concern, Strong Performance, But Flat Price, Buy

China

Nongfu Spring Co. Ltd. supplies soft drinks. The Company develops, produces, and sells bottled mineral water, fruit juice, sports drinks, and tea drinks. Nongfu Spring also offers barreled mineral water door-to-door services.

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Nongfu Spring (9633 HK)