In "The Big Banks," Citigroup lowered the target price for CR BEVERAGE to 10.7 yuan, as high PET prices may affect profit margins

Citi published a research report indicating that CR BEVERAGE (02460.HK) saw a year-on-year sales decline of 18.6% to RMB 11.002 billion last year, which was lower than the bank's and market expectations. Net profit fell 39.8% year-on-year to RMB 985 million, in line with the profit warning guidance. The payout ratio is 90%, reflecting a dividend yield of 4.8%.

Management stated that sales progress from January to February this year has been positive, with the goal of achieving steady growth in bottled water sales for the year and over 20% year-on-year growth in beverage sales. The bank believes that the key uncertainty lies in PET prices; if PET prices remain high, it will affect profit margins, especially in the second half of this year.

The bank has lowered its earnings forecasts for 2026 and 2027 by 19% and 22% respectively to reflect the upward trend in PET prices; the target price has been reduced from HKD 13.1 to HKD 10.7, with a projected 5% dividend yield providing downside protection, maintaining an "outperform" rating