Goldman Sachs expects China Resources Beverage to maintain its position as the second-largest player in China’s 230 billion yuan bottled water market, leveraging its brand, production, and distribution network advantages, and the company is also anticipated to continue expanding in the 689 billion yuan carbonated beverage market.
Goldman initiated coverage of China Resources Beverage with a “Buy” rating and a target price of HK$17.3.
The bank expects the company’s sales to grow at a compound annual growth rate (CAGR) of 8% from 2023 to 2028, with a net profit margin expanding from 10% to 17%, mainly driven by category expansion, channel diversification, and gross margin improvement, with operating profit margin rising from 12.9% in 2023 to 21.8% in 2028, mainly due to declining production and raw material costs.