Blade Pointing Inward, Overcoming Reform Obstacles: CR BEVERAGE (02460) Proves Through Mid-term Financial Report That Reform is on the Right Path.

In the first half of 2026, the beverage industry presented a response under overall pressure: the consumption market weakened sequentially in the second quarter. Due to industry competition, extreme weather, and other factors, the production of soft drinks changed from a year-on-year increase of 2% in the first quarter to a year-on-year decline of 6% in the second quarter, while the retail sales of packaged water saw a further decline of 10% in the second quarter. According to the disclosed mid-term industry financial reports, performance within the industry exhibited notable differentiation; tea beverages and functional drinks led industry growth, but a careful breakdown shows that the revenue and profit growth rates of major players weakened on the margin. Against the macro background of a dual decline in sales and production in the beverage industry in the first half of the year, along with traditional offline channels under pressure, CR BEVERAGE (02460) disclosed its mid-term performance on August 26. Despite still facing pressure, there are signs of marginal improvement: the company entered a deep adjustment period in 2025, focusing on internal adjustments and implementing reforms in 2026. In the first half of the year, it achieved revenue of 5.455 billion yuan and a net profit attributable to shareholders of 592 million yuan, with revenue and profit declines narrowing compared to the same period last year, indicating a stabilization of downward trends, and the momentum for reforms has begun to be released. The highlights of this financial report go beyond the current data itself, reflecting a firm reform strategy behind it, moving away from a short-term profit focus to anchor long-term sustainable growth. Building a Solid Foundation: Improving Profit Quality A breakdown of CR BEVERAGE's mid-term financial report reveals an enhancement in profit quality, accumulating momentum for healthy growth in future performances. As the beverage industry shifts to a game of existing stock competition, the market logic undergoes a fundamental change: previously, companies relied on scale expansion to capture market share, but now operational excellence is paramount, with development quality becoming the core attribute for companies to navigate through cycles. The temporary contraction in revenue at CR BEVERAGE is largely due to the company's proactive strategic choices. According to the earnings call, the company pushed for improved channel health and price management in the first half of the year, actively shrinking some low-price, low-efficiency channels, halting supplies to certain low-price e-commerce platforms, and delisting some terminal products. By the end of June, the number of low-price links on online platforms had significantly decreased year-on-year. At the same time, the company focused on improving the freshness of packaged water and beverage products in channels, accelerating inventory turnover, and facilitating healthy channel operations. For the packaged water segment alone, the company achieved revenue of 4.608 billion yuan in the first half of the year, a year-on-year decrease of 8.3%, which aligns closely with the overall decline rate of the industry in the first half of the year. Under a series of active channel reforms and governance measures, revenue has shown signs of gradually stabilizing, with a significant improvement in operational quality sending a positive signal to the market. In the first half of the year, the gross margin was 47.6%, an increase of 0.9 percentage points year-on-year, despite pressure on raw materials like PET; the net profit margin was 11.1%, up 1.9 percentage points compared to the previous year. Based on the disclosures from the company's earnings announcement and earnings call, the driving factors include streamlined selling expenses, optimized product structure, and a significant decrease in logistics costs. These signals indicate that the company is not merely using "price to exchange volume" as its only solution. The expense strategy has shifted from being broad to focusing on high efficiency, with more precise expenditure allocation and higher-quality product positioning forming the cornerstone of long-term competitiveness. With the recovery of fundamental performance and the release of dividends from reform measures, the company is expected to experience healthier profit restoration. Organizational Pivot for Reform Collaboration: Restructuring and Frontline Reforms Releasing organizational efficiency serves as the foundation for all subsequent growth stories. In the first half of the year, CR BEVERAGE advanced organizational restructuring. One of the most impactful measures within the industry is the official implementation of the dealer workforce and incentive policies. In the fast-moving consumer goods sector, channel efficiency is often a core variable that determines the competitive landscape and is a fundamental competency of the industry. The last mile from factories to consumers relies on a nationwide dealer network and the execution power of frontline business teams; the morale and professionalism of the frontline team directly affect terminal penetration, display quality, and sales performance. Whoever can genuinely provide incentives to the frontline will control the source of the channel's execution power. With over 40 years of experience in channel development, CR BEVERAGE has launched significant dealer workforce and incentive policies in the first half of the year, in response to rapidly evolving channel landscapes and increased competitive pressure in the industry. The company also implemented a compensation system strongly linked to operational efficiency, adhering to more work leads to more earnings, and higher performance deserves better pay, launching specific incentives for peak seasons that address historical shortcomings in frontline incentives. The implementation of the dealer workforce model opens new possibilities for CR BEVERAGE to achieve greater terminal market coverage, breaking through 2.4 million terminal points. For a listed company with a state-owned enterprise background, this means breaking existing boundaries of labor, compensation, and incentive systemsthis is an internal reform approach that is quite introspective. The signal it conveys is more important than the policy itself: the management is acknowledging the pain points and treating performance achievement as a firm commitment. This market-oriented reform breaking boundaries will provide the company with new momentum. Channel Collaboration for Reform: Channel Transformation and Dual-Driven Approach Organizational mechanism reforms have resolved the internal driving force issues related to people and distribution, while channels and brands determine whether the reform momentum can tangible market outcomes. In the first half of the year, CR BEVERAGE shifted its channel reliance from a traditional single core to a dual-driven approach of stabilizing traditional fundamentals + focusing on emerging channels. In terms of traditional channels, the core focus is on flattening the reform structure. In key cities like Nanjing, Suzhou, Changsha, and Tianjin, direct distribution to terminals by dealers has been piloted, compressing intermediary distribution links. In the first half of the year, the self-operation rate of dealers increased by 10 percentage points year-on-year. Channel flattening is a crucial lever for reshaping the value chain of traditional pathways. On one hand, it allows more profit to remain with dealers and terminal stores, reinforcing the operating willingness of channel partners and enhancing terminal engagement. On the other hand, it shortens the commodity flow chain, accelerating product turnover efficiency and strengthening the company's reach and control over terminals. Combined with the dealer workforce incentive policy currently being pushed, the flattening reform will bridge the gap for mechanism implementation, allowing the effects of frontline incentives and terminal expansion reforms to genuinely transmit to the market's tail end, solidifying the fundamental base of traditional channels. Emerging channels have progressed from tentative to a systematic approach. The company stated in its earnings call that, given the existing competition landscape, proactive engagement is crucial to breaking the deadlock. To this end, a specialized team has been formed to coordinate the development of emerging channels. In the snack discount sector, a partnership was established with Fujian Wanchen Food Group, covering over 20,000 direct-operated stores nationwide; instant retail rapidly expanded, adding nearly 2,000 cooperation points and doubling the sales volume of packaged water; and the household channel grid scale approached double, achieving a fulfillment rate of 95%, with channel sales also doubling. At the same time, the construction of household channels has facilitated the fulfillment linkage with Wuxi Online Offline Communication Information Technology Co., Ltd., effectively reducing the last-mile delivery costs. In the first half of the year, e-commerce single box delivery rates improved more than 20% year on year, and the effective decrease in logistics costs will support the profitability of the companys new channels and further enhance its profit quality. Brand Collaboration for Reform: Brand Youthfulness and Resonant Upgrades Brand marketing has expanded from broad exposure to deep resonance, with emotional connections becoming a new focus. The company leveraged popular IPs and social to break the brand out of its niche: collaborating with a popular cat IP to create engaging marketing topics and using major sporting events to deliver thematic content. Moreover, the popularity of the IP has not only stayed at the communication level, but has also penetrated into productsthe launch of the national team special label water has truly transformed attention into continuous customer purchases. In terms of creative strategies, the approach follows the principle of once deployed, amplified at multiple levels, constructing a communication closed loop that links Wuxi Online Offline Communication Information Technology Co., Ltd. The topic So In Sync With You triggered discussions across the internet, translating creativity into customized city copy and outdoor big screens, stimulating users to actively share and forward, forming a secondary communication closed loop of offline seeding and online fermentation, with user-generated spreads exceeding one million times in Nanjing within a week. On the media side, Zhiben Qingrun has rolled out large-scale screen placements across multiple core cities, combined with high-frequency memory-point videos, continuously reinforcing the mental association between brand name and product function. The simultaneous progress of channel reconstruction and brand rejuvenation indicates that the reform momentum is extending from internal organizational capabilities to the market's tail end. Valuation: Combining Growth Elasticity and Defensive Attributes The determination for reform is also reflected in the commitment to capital execution. The market style is quietly shifting: capital allocation is moving from high-valuation sectors to low-valuation, high-dividend defensive sectors. The Hong Kong stock consumption sector has become a new base for buybacks; companies like NAYUKI, MNSO, and MENGNIU DAIRY have collectively initiated buybacks, and CR BEVERAGE is also among thosesuggesting that the consumption sector is regaining its position in investment research. According to tomorrows disclosure reports released by the Hong Kong Stock Exchange, CR BEVERAGE has officially launched a share repurchase: from August 28 to September 7, a total of 1.6248 million shares were repurchased in six transactions, with a total repurchase amount of approximately 11.9835 million Hong Kong dollars, and all repurchased shares are intended for cancellation. The announcement for this repurchase plan was made on June 30, 2026, with an authorized maximum repurchase amount of 530 million Hong Kong dollarsindicating that the repurchase initiative has only just begun. In conjunction with the companys fixed dividend plan of no less than 0.37 yuan per share annually from 2026 to 2028 (corresponding to a dividend yield of approximately 5.8%), CR BEVERAGE is providing a visible return anchor for long-term capital through a combination of dividends + repurchase. CR BEVERAGEs current valuation has reached a low range since its listing, with a dividend yield (TTM) of about 5.8%. It possesses outstanding defensive characteristics within the Hong Kong stock consumption sector; combined with the gradual release of reform dividends and a performance recovery on the horizon, the company is expected to deliver stable and upward elastic shareholder returns in the upcoming cycle. Conclusion Based on the companys performance and operational effectiveness in the first half of 2026, the managements statement at the 2025 annual performance release, acknowledge the gap with industry benchmarks, identify shortcomings, address deficiencies, and drive reform, is not simply a slogan for the capital market but is now being effectively implemented. From this mid-term performance window, CR BEVERAGE has shown signs of marginal improvement. The three-year dividend return commitment, coupled with the initiated share buyback, has created a capital safety net, while the release of reform momentum has opened up upward elasticitybetween offense and defense, the company is poised for dual restoration of profits and valuations during the 15th Five-Year Plan period, and this mid-term financial report provides a clear answer for long-term capital.