Bank of America Securities: Cost pressures in China's beverage industry are easing, but growth barriers still exist. Nongfu Spring (09633) is the preferred choice.

Bank of America Securities issued a research report stating that the price of PET plastic has fallen by more than 20% from its peak in April to May, which will help partially alleviate investors' concerns about cost inflation and the profit outlook for beverage companies in 2026 and 2027. However, PET prices in July are still up by about 20% year-on-year, and with the uncertainty brought by the Iran conflict, cost risks still exist. At the same time, weak consumer demand, unfavorable summer weather, and increasing competition continue to suppress revenue growth prospects. The bank has lowered its 2026 and 2027 estimated earnings per share for covered stocks in the Chinese beverage industry by an average of 6% and 5%, and the average target price has been lowered by 9%. With its robust revenue growth prospects and resilient profit margin performance, NONGFU SPRING (09633) remains the preferred stock in this sector.