CMSC raises target price of U-PRESID CHINA (00220) to 9.9 Hong Kong dollars and maintains a "neutral" rating.

CMSC released a research report stating that U-PRESID CHINA (00220) had a stable performance in the first half of the year, but there is still significant uncertainty in the second half. The target price has been raised from 9.2 Hong Kong dollars to 9.9 Hong Kong dollars, based on a mid-term forecast price-earnings ratio of 17 times in 2026; The current valuation reflects a relatively balanced risk-return profile, maintaining a "neutral" rating. The report points out that due to the lack of pricing plans by the company, and the continuous increase in promotion efforts in core categories such as sugar-free tea, coupled with the fact that the favorable raw material costs have been largely utilized, the growth and profit margin may have limited room for upside. The company performed well in the first half of 2025, with a revenue growth of 10.6% and a net profit growth of 33.2% year-on-year, mainly benefiting from favorable raw material costs and operational efficiency improvements. However, the institution still maintains its cautious judgment made in the previous downgrade, pointing out that the company's sales-driven strategy faces increasing competitive pressure and execution risks. Although the management reiterated the annual sales growth target of 6 to 8%, and continued to emphasize long-term brand investment over short-term price promotions, new uncertainties are emerging, especially regarding the scale and duration of subsidies from food delivery platforms, which have begun to disrupt the distribution landscape since April.