On Monday (16th November), Nongfu Spring (9633.HK) increased sharply by 11.01% and reach the highest historical price HKD41.90 with 557 million transactions, closing at HKD41.20.
The latest report issued by Tianfeng Securities believes that the demand for Nongfu Spring’s bottling water has grown steadily while the soft drink sector has improved in the second half of the year. It is the first to "buy" with a six-month target price of 45 instead. In particular, the company's leading layout of medium and large-sized packaging water has grown rapidly, and new products on the beverage business side have been gradually distributed, contributing to the increase in the company's performance, covering for the first time, and giving it an "overweight" rating.
Meanwhile, from fundamental perspective, Huaan Securities believes that Nongfu Spring as a leading mineral water company in China, the company seizes the opportunity to upgrade drinking water prices and water quality and establishes a brand image at the mainstream price of 2 yuan (RMB 2) water, thus enjoying a premium price higher than its competitors. Strong cost control and refined operations enable the company acquiring high profitability and forming barriers to competition through water sources, brands and national channels. The demand for packaged water has grown steadily. Especially, the company’s leading layout of medium and large-sized packaged water has grown rapidly, and new products on the beverage business side have been gradually distributed, contributing to the company’s performance. The overall prospect of Nongfu Spring is optimistic.
Source: TradingView
