Incident: On April 1, the company held a new product launch of Coconut Shark and a press conference for O'Neal brand spokespersons.
“Coconut Shark” focuses on healthy zero additives, focusing on consumption scenarios such as exercise and coffee preparation. The new product “Coconut Shark” is 100% non-concentrated reduced coconut water. It focuses on zero addition+low calories+natural electrolytes+quick hydration, focusing on consumption scenarios such as exercise, fitness, dining, and freshly brewed coffee. Its essence is to upgrade and replace pure water and animal protein under healthy consumption trends, and there is plenty of room for future growth. The company develops products of different specifications around the above consumption scenarios. 250ml and 330ml are for self-drinking (sports and fitness, etc.), and 1L is for banquets+small meals. Furthermore, the company's products form differentiated competition. The main ingredients are the “three coconuts” and the gold ratio is blended. The terminal price is 6 yuan/330 ml, which is basically in the same price range as IF and Fino, which is lower than the 8-10 yuan price range where Vita Coco and Coco have a full score.
Employ basketball star O'Neal as the spokesperson to enhance the Coconut Shark brand image and differentiate. The company uses sports, fitness, outdoor camping, etc. as the core consumption scenarios. On the one hand, it sponsors marathons and surfing trips offline, and on the other hand, it hires basketball star O'Neal as the brand ambassador. His personal style is in line with the Coconut Shark brand. We believe that the company's multi-dimensional marketing activities will help enhance the Coconut Shark brand image. In the long run, it is expected to form a certain brand cultural separation from competing products, and the short-term star effect may also boost product terminal sales.
In 2024, we will sell goods at existing dominant channel outlets, focusing on the pace of sales and marketing promotion during the peak season. Currently, the coconut water consumption market is mainly concentrated in third-tier cities and above. The company also has a certain channel base in the above markets. In 2024, on the one hand, it will distribute goods at superior outlets with existing channels, and on the other hand, it will also lay out more modern channels. Considering that the high popularity of the coconut water category combined with 24 years of hot weather is beneficial to terminal sales, it is recommended to focus on the catalytic effects of peak season delivery and marketing. In the long run, the attributes of coconut water products are in line with future healthy consumption trends, and category dividends are expected to continue to be released, and the company's forward-looking layout of coconut water products is expected to seize consumers' mentality during the category cultivation period. On the one hand, it is conducive to increasing brand tone, and on the other hand, opening up the price ceiling and contributing to the second growth curve.
Investment advice: Net profit from 2024 to 2026 is expected to be 3.3/38/450 million yuan, respectively, +17.1%/16.2%/18.0% year over year, EPS of 0.73/0.85/1 yuan, and corresponding PE of 21/18/15X, respectively. Considering the uncertainty about the pace of new products and new channel expansion, the “careful recommendation” rating is maintained.
Risk warning: risk of competition exceeding expectations, risk of falling industry demand, risk of new business expansion falling short of expectations, food safety risk.