The other side of CR BEVERAGE's 2025 financial report: recounting value in the face of adversity, reshaping growth through reform.

For CR BEVERAGE (02460), 2025 is a period of history that needs to be reviewed, and 2026 is destined to be the year of a new chapter. Facing the pressure of the 2025 financial report, CR BEVERAGE is standing at an unprecedented crossroads. At the performance presentation in March, the newly appointed chairman of the board, Gao Li, did not choose to sugarcoat the situation but instead faced the harsh reality with the phrase "below expectations" and boldly stated that "the gap is the potential". This is a "reform manifesto" that cuts internally and breaks out externally. The management team at the performance meeting put forward the operating management ideas for 2026: "benchmarking, filling weaknesses, and daring reform", with a clear and firm goal: using "deepening and penetrating existing product categories" as the foundation, "deep cultivation of channels and terminal construction" as the driving force, and "reorganization and incentive optimization" as the core driver to comprehensively improve performance and business quality, and win the transformation battle for the future. On the product side, enrich the water category SKU combination, focus on three high-potential tracks: ready-to-drink tea, functional beverages, and fruit juice. On the channel side, strengthen distributor collaboration, enhance terminal competitiveness. On the branding side, deepen sports marketing and youth strategy. In the organization side, boldly divide the country into eight major war zones, giving decision-making power to the front-line "hearing the gunfire". The company has announced the final period and special dividends, with a dividend payout rate of up to 90.3% for the year, demonstrating its commitment to investors' returns during a period of operational pressure. The most significant reflection of the management's current value judgment is not slogans, but actions: led by board chairman Gao Li, several directors and management members have announced plans to increase their holdings of company stocks by up to HK$3.4 million within the next six months - this represents the management's strong confidence in the company's long-term development and value enhancement. CR BEVERAGE is announcing to the market in this way that the era of rapid growth driven by organizational capability, as seen in the past with Nongfu Spring (the predecessor of CR BEVERAGE), is making a comeback. In 2026, we must "hear the gunfire": boldly reform, fully inspire organizational and business vitality. If 2025 was a year of "decay" for CR BEVERAGE, then 2026 is seen as the year of "renewal", with the focus on the dual-driven synergy of strategic focus and organizational reconstruction. The starting point and core of reform lie in a reorganization that directly addresses pain points. The performance briefing revealed that the company has initiated a large-scale organizational restructuring: restructuring the eight major areas as frontline battle units, pushing power to the front lines; streamlining headquarters, aiming to create a "lean, efficient, and professional" core; optimizing frontline incentive schemes to stimulate organizational vitality and combat capabilities. The core logic of change is to "let those who hear the gunfire make scientific decisions", which means that front-line battle units will be given greater autonomy to make decisions, enabling them to flexibly respond to market changes and truly transition from a "large army" to an "agile organization". After unleashing organizational vitality, the business battle will then begin. On the product side, CR BEVERAGE pursues "quality and efficiency" and "moat protection". The company clearly states that it aims to steadily improve the base of bottled water and increase the proportion of beverage sales, focusing resources and expanding single products, with the goal of increasing its share to 30% by the "15th Five-Year" period. Resources will be highly focused on the three high-potential tracks of ready-to-drink tea, functional beverages, and fruit juice, and the research and development system will be restructured to create differentiated products with high barriers through technological innovation, building a product moat. Channel reform is also being carried out simultaneously, with a focus on "quality improvement" and "diversified expansion". The company continues to promote the flattening of traditional channels, optimize channel profit structures, enhance distributor self-operating capabilities, aiming to enhance the overall competitiveness of the channels. At the same time, it will continue to embrace emerging channels such as catering and households to achieve deeper and wider penetration. According to public information, CR BEVERAGE has 2.4 million traditional terminal points, and the company has explicitly stated that in 2026 it will further increase the coverage of all product categories and focus on single-point sales efforts, with a clear logic for performance improvement. In 2026, the company has launched a one-yuan free drink scan code promotion activity for the three major beverage brands, which will effectively improve the precise placement efficiency of promotional expenses and drive terminal sales. At the same time, a "efficiency revolution" surrounding the entire value chain is also underway, with the company seeking to improve resource utilization efficiency across the board, planning and implementing projects to reduce costs in research and development, production, logistics, and procurement. Adhering to the supply chain principle of "guarantee supply, guarantee quality, optimize cost, and be flexible", the company will continue to optimize production capacity through a combination of self-owned and cooperative models, with the completion of the Danjiangkou factory in 2026, and the expansion of beverage lines in Zhaoqing and Yixing, gradually increasing self-production rates and capacity utilization rates. Further promoting the "switch from carton to film packaging" to deeply tap internal resources through packaging transformation, enhancing product and channel competitiveness. In the medium to long term, through systematic digitalization and scale effects, resource efficiency will be significantly improved. This series of transformations, from top-level design to peripheral operations, is a systematic guarantee for the company to face more intense competition in the future and unlock growth potential. Attributes of a value stock: High dividends and management's increased holdings build a cycle value anchor In the capital market, actions often have more penetrating power than words. CR BEVERAGE's decisions in 2026 to implement "high dividends" and "management's increased holdings" not only demonstrate the firm confidence in the implementation of reforms but also serve as a strong proof that places shareholder returns at the strategic core, providing investors with a value anchor to navigate through the cycle. The high dividend payout rate of 90.3% is rooted in the healthy financial fundamentals. In 2025, CR BEVERAGE's net cash flow from operating activities increased by 8.5% year-on-year, and the asset-liability ratio decreased by 10.1 percentage points year-on-year, maintaining a healthy overall asset structure. Compared to the global consumer goods industry, this dividend payout is highly attractive to the capital market, conveying three signals to the market: the company has absolute confidence in its cash flow generation ability; even during the pains of transformation, it still emphasizes shareholder returns; this move can effectively stabilize core shareholders and build a solid trust moat in times of market pessimism. The collective increase in holdings by directors and management serves as the most vivid endorsement of this confidence. On March 26, the company announced that several directors and management members, led by the chairman of the board Gao Li, will increase their holdings of company stocks by up to HK$3.4 million within the next six months. It should be noted that on March 27, CR BEVERAGE's directors and management swiftly bought 162,800 shares of the company in the secondary market, sending a clear signal to the market: they firmly believe that the reform measures in 2026 will take root and that the company's value will continue to increase. Value reconstruction: From defensive allocation to growth reassessment From a medium to long-term perspective in the capital market, the current CR BEVERAGE presents a highly attractive investment profile: it not only has a solid base of bottled water that provides value and cash flow security but also has significant performance repair and growth elasticity through a clear reform path. As the 2026 strategy progresses, the company's fundamentals are undergoing a qualitative change. The doubling of the expected share of the beverage business by the "15th Five-Year" period will further strengthen the company's valuation logic - beverage business typically has higher gross profit margins and faster growth rates than bottled water. The beverage industry is a typical "scale game". In today's environment of rising raw material costs, fragmented channels, and intense competition, brand enterprises with strong supply chains and financial strength will have a stronger competitive edge. With over 7 billion in cash reserves and over 40 years of deep cultivation in channels and supply chains, CR BEVERAGE holds a huge advantage during industry transformation. The capital market has reached a consensus on this. Despite the short-term pressure on performance, several securities firms (such as CICC, Guotai Haitong, Huatai, etc.) remain optimistic about CR BEVERAGE's medium and long-term prospects, giving "buy" or "hold" ratings. Institutions generally have confidence in the management's reform execution, channel efficiency improvements, and performance recovery from the uptrend in the beverage business, with high dividends and management's increased holdings further bolstering valuation safety margins, with value return expected. Conclusion For investors, the focus should shift from the financial performance of the past year to the quality of the implementation and execution of reform measures in the coming year. In my view, CR BEVERAGE's 2025 performance presentation has transcended mere financial report analysis, becoming a strategic declaration and mobilization towards the future. It candidly reveals the pains of transformation, but more importantly, it displays the management's courage to reform and innovate comprehensively. From the organizational restructuring that addresses pain points directly, to the resource focus on business breakthroughs, to the efficiency optimization across the entire chain, the company is solidifying its long-term competitiveness from multiple dimensions.