Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
Investing.com - UBS downgraded China Resources Beverage (HK:2460) stock rating from Buy to Neutral and slashed its price target to HK$11.70 from HK$18.03 following disappointing first-half 2025 results.
The Hong Kong-listed beverage company reported revenue and net profit declines of 19% and 29% year-over-year respectively in H1 2025, falling short of consensus estimates that had projected low- to mid-teens net profit growth.
The underperformance was primarily attributed to a 23% year-over-year revenue decline in the company’s packaged water segment, despite its beverage revenue growing 21% during the same period. UBS noted the water revenue decline stemmed from increased distributor rebates and estimated mid- to high-single-digit volume declines resulting from channel reshuffling.
UBS forecasts a volume recovery in the packaged water segment beginning in the second half of 2025 as channel reshuffling impacts diminish, with a potential earnings turnaround in 2026 driven by continued strong beverage segment performance and likely water segment volume growth.
The investment bank believes China Resources Beverage’s current valuation of 19x 2026 estimated price-to-earnings is fair, noting the stock trades at a 35% discount to its closest competitor Nongfu, while projecting a 7% earnings per share compound annual growth rate from 2025 to 2027.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.