$NONGFU SPRING(09633.HK) 24H2 performance quick interpretation: The company's performance in 24H2 significantly missed expectations. The market originally expected that in the second half of the year, with the weakening of public opinion, the expansion of green bottled water supply, and the packaging water business could significantly recover, but the actual situation is that the packaging water business missed market expectations significantly due to weakened subsidies and intensified competition, while the tea beverage business, which was in high growth momentum, also saw a decline in growth rate compared to the same period last year due to a high base, slightly missing market expectations.

1. Packaging water business: The packaging water business in 24H2 declined by 24% year-on-year, continuing to slow down compared to the first half of the year (-18%). Dolphin Research believes the main reason is that the company increased the supply of green bottled water in the second half of the year. Although green bottled water helped boost market share, its factory price is lower than that of red bottled water, which lowered the overall revenue of packaging water.

2. Tea beverage business: The tea beverage business grew by 13% year-on-year in 24H2, partly due to the high base from the same period last year, and partly due to intensified competition in sugar-free tea, with many new entrants, causing the growth rate of the tea beverage business to decline compared to the over 50% high growth rate in the previous two years.

3. Stable expense investment: Due to the low price of green bottled water, the required channel promotion expenses are relatively low, so the overall control of expenses exceeded market expectations. Although the company controlled expenses relatively less, the core operating profit in 24H2 still declined by 11% year-on-year, falling short of expectations.

4. Dolphin Research believes that Nongfu Spring in the second half of the year is basically in the most difficult stage. In 2025, as the supply of green bottles narrows and subsidies weaken the company's profitability is expected to improve marginally.