On October 23, China Resources Group's dedicated ready-to-drink beverage company, 'China Resources Beverage', was officially listed on the Hong Kong Stock Exchange. Market data shows that as of the close, China Resources Beverage's stock price closed at HK$16.68 per share, up 15.03%, with a total market value of HK$39.162 billion. By listing in Hong Kong, China Resources Beverage has embarked on a new journey of diversified and high-quality development.

In fact, China Resources Beverage, holding the 'Yibao' brand and with an annual revenue exceeding one hundred billion, is not satisfied with the super large single product of purified water. Instead, it is expanding its layout in the beverage field, extending to tea, juice, functional beverages, and other promising tracks, with the beverage business expected to become a new engine for the company's performance growth in the future. As of now, China Resources Beverage mainly has a product combination of 13 brands including 'Yibao', 'Zhiben Qingrun', 'Mishui series', 'Holiday series', and 'Zuowei Cha Shi', totaling 59 SKUs.

It is reported that China Resources Beverage's IPO price in Hong Kong this time is HK$14.5 per share, with a global offering of 0.3478 billion shares, raising a total amount of HK$5.043 billion. UBS Group, BOCI, Citic Sec, and Bank of America Securities are joint sponsors. Cornerstone investors include UBS AM Singapore, China Travel Service, Wildlife Willow Limited, China Post Insurance, and Oaktree. The funds raised will mainly be used for optimizing production capacity, expanding channels, brand building, product R&D, digital upgrade, and potential investments and acquisitions, which are of significant importance for enhancing core competitiveness, reducing operating costs, enriching product lines, and expanding market share for the company.

Hard strength creates confidence in growth.

China Resources Beverage's parent company, China Resources Group, has long been rooted in Hong Kong and has outstanding strength in the Hong Kong stock market. Now, the successful listing of China Resources Beverage also means that China Resources Group has harvested its 18th listed company.

As one of the early domestic enterprises in the 1990s to specialize in the production and packaging of drinking water, and an important player in the ready-to-drink beverage track, China Resources Beverage has accumulated and honed its solid competitive advantage in products, brands, and channels over decades.

In the area of drinking purified water, China Resources Beverage has held the leading position for 12 consecutive years. According to the Zoknowledge report, in 2023, China Resources Beverage's market share was 32.7%. The retail sales of the company's 'Yibao' brand drinking purified water products reached 39.5 billion yuan in 2023, making it the number one brand in China's drinking purified water market.

In the beverage industry, according to the Zhoushi Consulting report, based on the 2023 retail sales figure, CR Beverages ranks in the top ten in the Chinese market in categories such as tea beverages, juice beverages, and coffee beverages. Among them, the company ranks first in the Chinese chrysanthemum tea beverage market.

Market performance is also reflected in the financial results, with the company's profitability significantly improving over the past three years. From 2021 to 2023, CR Beverages achieved operating income of 11.34 billion yuan, 12.623 billion yuan, and 13.515 billion yuan respectively; corresponding net profits were 0.858 billion yuan, 0.989 billion yuan, and 1.331 billion yuan, with net profit margins of 7.6%, 7.8%, and 9.9%.

The latest disclosed prospectus shows that CR Beverages' revenue increased from 3.94 billion yuan for the four months ended April 30, 2023, to 4.15 billion yuan for the same period in 2024; during the same period, net profit also rose from 0.356 billion yuan to 0.461 billion yuan.

Behind CR Beverages' solid growth in performance is closely related to the company's long-term cultivation of advantages in branding, technology, channels, and production capacity.

It is reported that CR Beverages has seamless coordination between its automated and efficient production capacity and the company's nationwide sales network. As of April 30, 2024, the company has cooperated with over 1,000 dealers nationwide, with over 130 production lines from its own and partner production facilities, supporting the expansion of product categories and market penetration.

Regarding products, taking packaged drinking water as an example, CR Beverages' product matrix includes "Yi Bao", high-end natural mineral water in glass bottles "Yi Bao Lu", natural mineral water "Ben You" (bottled) and "Jia Lin Shan" (barreled), bottled and canned sparkling soda "FEEL", covering multiple consumption scenarios such as outings, home, business, dining, and sports.

With its strong product quality and good reputation among consumers, the main brand "Yi Bao" has become the "Official Drinking Water of the Chinese National Team". In terms of sales data, in 2023, CR Beverages had sold over 14.6 billion bottles of "Yi Bao" brand aquatic products.

Innovation empowers future growth.

Market analysis believes that the current penetration rate of packaged drinking water in China is relatively low, and the scale is expected to continue to grow. According to the report from Torch Insight, the ready-to-drink soft drink market in China has a wide space, growing from 722.3 billion yuan in 2018 to 909.2 billion yuan in 2023, and is expected to increase to 1.2 trillion yuan by 2028, with a compound annual growth rate of 5.8% from 2023 to 2028. Deeply cultivating in the industry and continuously solidifying its foundation, China Resources Beverage will benefit.

In fact, in recent years, China Resources Beverage has been diligent in the expansion of product specifications and categories, and its forward-looking layout has been highlighted. According to the prospectus, from 2021 to 2023, the compound annual growth rate of revenue and sales volume of large-format packaged drinking water products of China Resources Beverage both exceeded 10%, and the proportion of revenue from packaged drinking water categories has steadily increased year by year.

Innovation is the foundation of China Resources Beverage's development. The company is not limited to the 'selling water' business, but also implements a multi-category development strategy of 'one super, many strong' in the beverage track, and continuously strengthens its presence.

Data from the prospectus shows that the research and development expenses of China Resources Beverage increased from 49 million yuan in 2021 to 61.5 million yuan in 2023, with a compound annual growth rate of 12.0%. Among them, the new product '350ml small-size honey lemon water' developed for the e-commerce channels targeting young customers became a hit product, ranking first in juice drink category sales on Douyin platform in the summer of 2023.

In addition, in 2023, the retail sales of China Resources Beverage's five beverage products including 'Clear Point Purified Water', 'Honey Water Series', 'Holiday Series', 'Fire Coffee', and 'Afternoon Milk Tea' all exceeded 0.1 billion yuan. It is evident that its beverage business is showing strong momentum. According to the prospectus, from 2021 to 2023, the retail sales of China Resources Beverage's beverage products grew at a compound annual growth rate of 38.6%, far exceeding the industry average of 4.0%. As of June 30, 2024, the revenue generated by its beverage products increased by 40.2% compared to the same period last year.

In addition to product aspects, the company's innovative thinking is also reflected in channel strategies and marketing models. Guided by the sales strategy of 'fine cultivation, ultimate victory', the company continuously enhances its influence in retail outlets through ongoing optimization of customer relationship management, market research, terminal displays, and regular commercial refrigerated display cabinet inspections.

From the perspective of consumer market, six major provinces where China Resources Beverage focuses on, Guangdong, Hunan, Sichuan, Guangxi, Hainan, and Hubei, have become core markets for packaged drinking water consumption. In addition, the company seizes the opportunity in the northern market, driving rapid sales growth in the northern market (Beijing, Tianjin, Hebei, and Shanxi), northeastern market (Heilongjiang, Jilin, and Liaoning), and northwestern market (Shaanxi, Inner Mongolia, Gansu, Ningxia, Qinghai, and Xinjiang), recording sales volume year-on-year growth rates of 16.0%, 20.9%, and 31.7% respectively in 2023.

It is reported that the funds raised by China Resources Beverage's IPO this time will be mainly used for strategic expansion and capacity optimization, accelerating sales channel expansion and enhancing channel efficiency, strengthening brand vitality and product research and development capabilities, digital upgrading, potential investments and acquisitions, etc.

With the Hong Kong listing, CR Beverage is expected to attract more attention from the investment end and maximize its own resource advantages, further optimize the supply chain, create differentiated market competitors, promote continuous expansion of scale and share, sustain the brand effect, and anticipate future business performance growth.

编辑/Wade