Citi released a research report stating that it lowered Master Kong Holdings (00322)'s net profit forecast for the 2024 and 2025 fiscal years by 3% and 5%. To reflect structural weakness in the Nongfu Spring noodle business and competitive pressure in the ready-to-drink business. Citi decided to lower its target price from HK$8.45 to HK$8.11, maintaining its “sell and sell” rating.
According to the report, given the sharp increase in the share of Nongfu Spring (09633) in the sugar-free tea drink market and the successive entry of new tea brands into the sugar-free tea drink market, the relevant situation has increased the competitive resistance of Master Kong Holdings' ready-to-drink (RTD) tea products business.