Uni-President China: New Initiatives in Sugar-Free Tea Segment to Lift Longer-Term Growth Outlook

We attended a site visit organized by no-moat Uni-President China to Chongqing. There, management laid out its strategies to scale the new sugar-free tea lineup and channel expansion initiatives, reaffirming our constructive view on its recent product launches. We continue to think that the beverage segment, rather than the food business, would be the major top-line and profit driver in the longer term. We think management has identified the appropriate price points and products to increase its competitiveness in the ready-to-drink tea sector. As a result, we raised our 2025-28 revenue and net income forecasts by 1%-4% to factor in stronger beverage sales and increased our fair value estimate to HKD 6.80 per share from HKD 6.60. Following the strong rally in recent months, we think UPC is slightly overvalued.