A Less Aggressive Sales Push by Nongfu Spring in 2023; Retain HKD 37 FVE

Narrow-moat Nongfu Spring reported 2022 results that largely met Refinitiv consensus on the top line and gross profit, and beat expectations on net profit primarily due to nonoperating items. Management cast a cautious tone on the top-line growth outlook for 2023, as it targets a more stable growth trajectory in the medium term. We retain our fair value estimate at HKD 37 per share but lower our 2023 top-line and net profit estimates. We continue to view the stock as overvalued and our fair value implies 2023 P/E of 40 times and PEG ratio of 2.5 times.