Futu news on October 22nd, $CR BEVERAGE (02460.HK)$ Today's dark pool opened high, up 9.52%, at 15.88 Hong Kong dollars, with a turnover of 0.151 billion Hong Kong dollars, a total market value of 37.283 billion Hong Kong dollars; 200 shares per lot, no commission, earning 276 Hong Kong dollars per lot.

Market source: Futu Securities >

Investment highlights

Major player in the bottled water industry: China Resources Beverage is the parent company of the major bottled water brand 'Nongfu Spring' in China. China Resources Beverage focuses on the production and sales of bottled drinking water products under the core brand 'Nongfu Spring'. According to the Zhoushi Consultancy report, China Resources Beverage has grown to become the second largest packaged drinking water enterprise and the largest drinking purified water enterprise in China based on 2023 retail sales. The 'Nongfu Spring' brand of China Resources Beverage achieved a retail sales of 39.5 billion yuan in 2023, with a market share of 32.7%, making it the leading brand in China's drinking purified water market.

Strong market share growth: According to the Zhoushi Consultancy report, from 2012 to 2023, China Resources Beverage has maintained its position as the number one brand in China's drinking purified water market for twelve consecutive years. With a market share of 32.7%, it is approximately four times that of the second-ranked company, surpassing the total of the second to fifth-ranking companies. In 2023, the company achieved double-digit growth in sales in the northern (Beijing, Tianjin, Hebei, and Shanxi), northeastern (Heilongjiang, Jilin, and Liaoning), and northwestern (Shaanxi, Inner Mongolia, Gansu, Ningxia, Qinghai, and Xinjiang) markets by 16.0%, 20.9%, and 31.7% respectively; in the Hong Kong region, total sales revenue in 2023 increased by 157.0% year-on-year. The company has a strong presence in the Yangtze River Delta market. As of the end of 2023, the company's packaged drinking water products ranked first in two provinces and second in five provinces/municipalities out of the seven provinces/cities along the Yangtze River.

Risk warning

Relying on a single product: China Resources Beverage owns a product combination of 13 brands including 'C'estbon,' 'Zhi Ben Qing Run,' 'Honey Water Series,' 'Holiday Series,' and 'Zoway Tea,' totaling 56 SKUs. However, according to the prospectus, in 2021, 2022, and 2023, the revenue generated by the packaging drinking water products centered around the major single product 'C'estbon' was 10.797 billion yuan, 11.887 billion yuan, and 12.405 billion yuan respectively, accounting for 99.8%, 99.8%, and 99.7% of the total revenue from packaging drinking water products during the same period. The packaging drinking water products accounted for 95.4%, 94.3%, and 92.1% of China Resources Beverage's overall revenue.

Intense industry competition: In the bottled water market, China Resources Beverage's main competitors include Nongfu Spring, Wahaha, Master Kang, Jingtian Baishan, etc. According to the prospectus, China Resources Beverage will face fierce competition from existing competitors and new entrants in the industry, with some competitors having established market positions in multiple categories and possessing more financial, research and development, marketing, and other resources. China Resources Beverage will also compete with some smaller brands which may be more innovative, able to better introduce new products to the market, and more efficiently and rapidly enter and serve niche markets.

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Editor/Jamie