Financial Services Association, May 31 (Reporter Lu Tingting) Dongpeng Beverage (605499.SH) continues to receive attention in the diversification of categories and the nationalization of channels. Company executives said at the performance briefing held today that Dongpeng Water Replenishment has a trend of becoming the company's second most popular product. In terms of production capacity layout, the company has now built and put into operation nine major production bases. The annual design capacity has increased to 3.35 million tons, and the supply capacity can further meet the needs of the rapidly expanding market.

For a long time, the core single product Dongpeng Drink has been the revenue pillar of Dongpeng Drinks. The company is not unaware of its dependence on a single product, and is also trying to cultivate and develop a second growth curve. To this end, it proposed a multi-category strategy that continuously expands from single products to multiple products, and launched diversified sub-brands such as Dongpeng Hydration, Pengyou Tea, Dongpeng Daka, VIVI Cocktail, and Island Coconut to the market.

Judging from the results, Dongpeng Specialty Drinks accounted for 96.24%, 91.87%, and 89.16% of revenue in 2022, 2023, and 2024Q1 respectively, showing a gradual downward trend; the share of revenue from other beverages increased from 3.76% in 2022 to 10.84% in the first quarter of this year.

“Dongpeng Rehydrate” electrolyte drink was launched last year. Company executives said at the conference that many new varieties of the product have risen to prominence, and the sales trend is getting better in 2024. Up to now, the highest daily sales peak has exceeded 120,000 boxes, and more than 1 million non-repetitive code scanning IDs have been added, expanding the audience base, covering more than 1.6 million terminals. There is reason to believe that Dongpeng Hydration has become the company's second most popular product.

Regarding the new product, Lin Muqin, Chairman of Dongpeng Drinks and Group President, said, “Sea Island Coconut and VIVI Cocktails have selected some urban channels for distribution. The current delivery schedule and market feedback are in line with the company's expectations.”

In terms of channels, Dongpeng Beverage achieved sales revenue of 3,761 billion yuan in 2023, an increase of 12.14% over the previous year, and its share of revenue fell from 39.50% to 33.43%. The National Marketing Division achieved sales revenue of 6.024 billion yuan, an increase of 41.40% over the previous year, and its share of revenue increased from 50.17% to 53.55%.

Zhang Lei, director of the company, said, “As can be seen from these two data, we have made a phased breakthrough in nationalization development.”

However, compared to Guangdong, the “old base,” Dongpeng Drinks entered the northern market late, and Lin Muqin confessed at the conference: “The northern market still needs to be gradually improved in terms of channel system construction.”

Dongpeng Drinks is also interested in entering the northern market. This year, construction of the company's first base in the northern region, the “Tianjin Production Base”, has officially started. After completion, it may ease issues such as transportation costs and supply restrictions. Investors also asked about this at the performance conference. Zhang Lei said that the base plans to invest no less than 600 million yuan to build 6 modern beverage production lines, which is currently under active construction.

“In the future, we will continue to cultivate channels and introduce new products, expand and strengthen frozen displays to promote continued rapid revenue growth.” A company executive said.

In addition, the market is worried that shareholders will repeatedly reduce their holdings or cash out immediately after the ban is lifted. Dongpeng Drinks has also attracted attention because similar situations have occurred many times, and investors expressed concern about this at the results meeting.

Going back simply, Dongpeng Beverage lifted the ban on 36 million shares in May 2022, and its second-largest shareholder, Junzheng Investment, immediately announced a plan to reduce its holdings. Since then, it has reduced its holdings several times. As of May 27 this year, Junzheng Investment's shareholding ratio in Dongpeng Beverage dropped from 9% in May 2022 to 5%, changing from the second-largest shareholder of Dongpeng Beverage to the fifth-largest shareholder.

On May 29 of last year, the 83.26 million shares obtained by Dongpeng Beverage before the IPO were lifted and put into circulation. The company launched a shareholder reduction plan on the same day. A number of company directors, senior supervisors and majority shareholders organized a group to reduce their holdings by no more than 35.7415 million shares, accounting for nearly 43% of the amount lifted during the current period. Based on the closing price on the day the ban was lifted, the value was about 5.9 billion yuan.

It is worth noting that on the third anniversary of its listing, Dongpeng Drinks this week ushered in a drastic lifting of the original stock ban. On May 27, Dongpeng Beverage lifted the ban on 241 million shares, with a market value exceeding 50 billion yuan. The unbanned ratio was 60.18% of the total share capital.

Regarding the matter of reducing holdings, company executives said, “The company will continue to monitor and supervise relevant stock holders, disclose information and implement holdings reduction plans in strict accordance with relevant holdings reduction regulations.”

In the secondary market, as of today's close, Dongpeng Beverage's stock price closed at 213.97 yuan/share, down 1.83% during the day, with a total market value of 85.6 billion yuan.