Guosheng Securities has reiterated its "Buy" rating for U-PRESID CHINA (00220), highlighting the company's stable performance and attractive dividend policy. The firm noted that instant noodles and beverages demonstrate strong essential demand characteristics, allowing them to withstand industry cycles. U-PRESID CHINA's outstanding product innovation capabilities, coupled with increased travel demand and effective retail network expansion, are expected to drive short-term growth in its instant noodle and beverage segments. Over the medium to long term, improvements in capacity utilization, ongoing optimization of the product mix, and a higher proportion of high-margin products are anticipated to support steady profit margin expansion. Additionally, the company is likely to maintain its high dividend distribution policy. Guosheng Securities forecasts net profit attributable to shareholders to increase by 7.5%, 7.1%, and 6.8% year-on-year for 2026–2028, reaching RMB 2.20 billion, RMB 2.36 billion, and RMB 2.52 billion, respectively.

Key points from the analysis include: U-PRESID CHINA released its 2025 annual report, reporting revenue of RMB 317.14 billion, up 4.6% year-on-year, and net profit attributable to shareholders of RMB 20.50 billion, an increase of 10.9% year-on-year. In the second half of 2025, revenue was RMB 146.28 billion, down 1.7% year-on-year, while net profit attributable to shareholders fell 13.6% to RMB 7.64 billion. The company distributed RMB 20.5 billion in cash dividends for 2025, representing a payout ratio of 100.01%.

The food business maintained a focus on health and quality, achieving steady growth. Revenue from the food segment reached RMB 104.94 billion in 2025, up 5.0% year-on-year, with segment profit rising 40.1% to RMB 3.79 billion. The profit margin for the food segment improved by 0.91 percentage points to 3.61%. The company plans to continue investing in health-focused, specialty, and emotionally resonant products to meet evolving consumer demand for diversity and wellness.

Despite intensifying competition in the beverage industry, U-PRESID CHINA remains committed to long-term brand value. Beverage segment revenue reached RMB 194 billion in 2025, up 1.2% year-on-year. Sales of tea, milk tea, juice, and other beverages were RMB 88.02 billion, RMB 64.80 billion, RMB 33.40 billion, and RMB 8.49 billion, representing year-on-year changes of +2.6%, +1.2%, -7.4%, and +29.3%, respectively. Beverage segment profit increased 5.3% to RMB 24.07 billion, with the segment profit margin rising 0.48 percentage points to 12.36%. The company continues to emphasize value-based marketing and brand building, maintaining stable pricing and fostering a healthy competitive environment. It is also actively expanding and refining its market channels to effectively cover on-the-go, food service, home, sports, and gifting occasions.

Gross margin improvement was notable, particularly in beverages, contributing to overall profitability. In 2025, the company's overall gross margin increased by 0.66 percentage points to 33.20%. The food segment's gross margin rose 0.6 percentage points to 27.1%, while the beverage segment's gross margin improved by 1.2 percentage points to 37.8%. Other businesses saw a gross margin increase of 2.6 percentage points to 18.8%. The net profit margin attributable to shareholders reached 6.46%, up 0.37 percentage points year-on-year. Sales and administrative expense ratios decreased slightly by 0.01 and 0.09 percentage points to 22.2% and 3.56%, respectively.

Potential risks include heightened industry competition, food safety issues, and weaker-than-expected demand.