Lyon: NONGFU SPRING (09633) upgraded to "highly confident in outperforming the market" with a target price raised to 45.4 Hong Kong dollars.

Lyon released a research report stating that they have upgraded the rating of NONGFU SPRING (09633) from "outperform the market" to "highly confident outperforming the market", with a target price increase from 35 Hong Kong dollars to 45.4 Hong Kong dollars. The strong performance of NONGFU SPRING's water business is expected to be a key catalyst in the next three months, with water business revenue expected to show strong growth in March due to a low base effect. The company has already achieved impressive growth in February under normal circumstances, and water business revenue is expected to increase by 10% year-on-year this year. According to the research conducted by Lyon, market competition in the packaged water business is expected to decrease year-on-year, and sugar-free tea beverages continue to benefit from the increasing penetration rate of sugar-free products in the mainland. The company's chairman, Zhong Sheng, stated that the company will not engage in price wars. According to the research, the company has been controlling the proportion of its green bottled purified water since the beginning of the year, and the discount rate has narrowed. As for competition with Wahaha, Lyon believes that NONGFU SPRING has stronger channel advantages and can gradually regain market share.