HK Stock Market Move | U-Presid China (00220) rose over 4% again. Institutions predict that the beverage business will drive the company's profit margins higher over the next 25 years.

U-PRESID CHINA (00220) rose by more than 4%, closing at 3.77% at the time of publication, reporting 7.7 Hong Kong dollars, with a turnover of 8.7072 million Hong Kong dollars. Zhongjin released a research report stating that the company is expected to have a year-on-year revenue growth of +6.2% in 2024, with a net profit of 1.85 billion yuan, an increase of +11.1% year-on-year, and a non-net profit (excluding one-time income in the first quarter of 23) an increase of +31.2% year-on-year. The corresponding net profit for the single fourth quarter of 24 is expected to be 2.2 billion yuan, an increase of 8% year-on-year, which is basically in line with market expectations. The bank predicts that the beverage revenue in 24Q4 will continue to perform well, and the food business will see a rebound in year-on-year growth; the gross sales difference in 24Q4 will continue to increase, and under the high base of profits in 24Q, a year-on-year growth will be achieved. The bank continues to point out that benefiting from travel and new product promotions, the beverage industry is expected to achieve good growth year-on-year in 2023-24 under relatively weak overall demand; considering the continuation of favorable factors such as travel and new product promotions, and the gradual recovery of demand, it is expected that the company's revenue in 25 will continue to achieve steady growth year-on-year driven by beverages. On the profit side, looking ahead to 25, although palm oil prices have risen more recently, there may be some adverse effects on gross profit margins, but considering the favorable factors such as sugar costs remaining positive, reductions, capacity utilization rate improvement, and structural improvement, it is expected that the company's beverage profit margin improvement may help drive overall profit margin improvement. In the medium to long term, the relatively good prosperity of the beverage industry is expected to benefit continuous growth in performance. Additionally, considering the relatively stable industry structure and increased profitability expectations from competitors, the unified profit margin is also expected to improve year-on-year, with an OPM of 2.9% in 1H24, and the company hopes to restore it to historical high single-digit levels in the future.