HK Stock Market Move | NONGFU SPRING (09633) rose nearly 3% in the afternoon, the company's market share still has room for improvement. Institutional investors continue to be optimistic about the doubled growth of Eastern Leaves.

NONGFU SPRING (09633) rose nearly 3% in the afternoon, up 2.48% at the time of publication, at HK$31 with a turnover of HK$163 million. Sinolink released a research report stating that NONGFU SPRING has a strong brand and channel advantage, and its fundamentals are expected to bottom out and rebound. Looking ahead, the bank believes that NONGFU SPRING has a natural water market advantage and has strong barriers in terms of water sources, channels, and brands. With a low base, it is expected to stabilize and recover. The promotion activities for green water will continue for some time, and competitors are unlikely to start a vicious price war due to profit margin concerns. The company is expected to gain a relative advantage in a soft demand environment. In the long term, China's per capita consumption of packaged water still has room to double compared to the US/Korea, and the packaged water industry is expected to continue expanding steadily, with the company likely to continue increasing its market share. The bank further pointed out that the long-term penetration rate of sugar-free tea is expected to increase to 50%-60%, and it continues to be optimistic about doubling growth of Oriental Leaf. With the improvement of consumer health awareness, the previous groundwork and cultivation of sugar-free beverages, China's penetration rate of sugar-free tea has rapidly increased in recent years. According to the bank's calculations, it will reach 20% by 2023, but compared to markets with similar tea-drinking habits like Korea and Japan, there is still more than four times room for expansion. Oriental Leaf is expected to quickly expand its market by leveraging its early brand promotion and consumer education, as well as its existing channel network resources. Given significant constraints of existing competitors in terms of products and channels, the bank expects Oriental Leaf to continue benefitting from the industry's expansion dividend.