Nongfu Spring has 2.37 million terminal retail outlets with users across the country, 80% of which are in low-tier cities.
According to information from the IPO, Nongfu Spring Co., Ltd. (hereinafter referred to as “Nongfu Spring”) plans to seek approval in the middle of this monthHong Kong Stock ExchangeAccording to the hearing, it is initially anticipated that it will be officially listed on the main board of the Hong Kong Stock Exchange in September.China Gold CorporationwithMorgan StanleyActing as a co-sponsor, the capital raised is approximately US$1 billion.
On the afternoon of July 31, the official website of the Securities Regulatory Commission issued an announcement stating that it approved Nongfu Spring to issue no more than 1.38 billion foreign-listed foreign shares, with a face value of RMB 0.1 yuan per share, all common shares; approved the transfer of a total of 458820,000 domestic unlisted shares held by 70 Nongfu Spring shareholders, including Health Hall Co., Ltd., to overseas listed shares. The relevant shares can be listed on the Hong Kong Stock Exchange after the conversion is completed.
On the evening of April 29, Nongfu Spring officially submitted a prospectus to the Hong Kong Stock Exchange.
According to the prospectus, Nongfu Spring, founded in 1996, is a leading packaged drinking water and beverage enterprise in China. Its main products cover categories such as packaged drinking water, tea drinks, functional drinks, and juice drinks.
Among them, the first “Nongfu Spring” drinking water was launched in 1997, the first juice drink product “Farmer Orchard” was launched in 2003, and the first functional drink product “Scream” was launched in 2004.
From 2017 to 2019, the revenue share of various product categories under Nongfu Spring was at a relatively stable level. In 2019, packaged drinking water accounted for 59.7% of revenue, while tea drinks and energy drinks accounted for 13.1% and 15.7%, respectively.
According to the Frost & Sullivan Report,From 2012 to 2019, Nongfu Spring maintained the number one market share of packaged drinking water in China for eight consecutive years. In terms of retail sales in 2019, Nongfu Spring's market share of tea drinks, energy drinks, and juice drinks all ranked in the top three in the Chinese market.
In addition, Nongfu Spring now has ten high-quality water sources, distributed in seven different regions in East China, Northeast China, Central China, South China, Northwest China, Southwest China, and North China, including Qiandao Lake in Zhejiang, Changbai Mountain in Jilin, and Daxinganling in Heilongjiang.
On the one hand, this layout can fully cover the supply in the national market, and on the other hand, it can effectively shorten the transportation radius, help reduce the time it takes for products to be delivered from production lines to shelves, control logistics expenses, and guarantee profit levels.
In terms of sales model, Nongfu Spring mainly sells products through traditional channels, modern channels, catering channels, e-commerce channels, and other channels (such as new retail channels represented by vending machine channels), and mainly uses a first-level distribution model.
As of December 31, 2019, Nongfu Spring has covered more than 2.37 million terminal retail outlets nationwide through 4,280 dealers. Among them, more than 360,000 terminal retail outlets are equipped with “Nongfu Spring” brand image freezers, which can significantly increase sales volume, especially in summer.
It is worth noting that,Of these more than 2.37 million terminal retail outlets, about 1.87 million terminal retail outlets are located in third-tier and sub-tier cities, accounting for 78.9%.
In terms of financial data, from 2017 to 2019, Nongfu Spring's revenue was 17.491 billion yuan, 20.475 billion yuan, and 24.021 billion yuan (RMB, same below), respectively.The compound annual growth rate is 17.2%This is higher than the 5.8% growth rate of the Chinese soft drink industry and the 3.1% growth rate of the global soft drink industry during the same period; net profit was 3.386 billion yuan, 3.612 billion yuan, and 4.954 billion yuan, respectively.Net profit margins were 19.4%, 17.6% and 20.6%, respectivelyIt is also far higher than the average profit level of the domestic and foreign soft drink industry of less than 10%.
In terms of gross margin, compared to the company's overall gross profit margins of 56.1%, 53.3%, and 55.4% in the past three years, the gross margins of the two major product categories of packaged drinking water, tea, and beverages are above average. Among them, in 2019,The gross margins for packaged drinking water and tea beverages were 60.2% and 59.7%, respectively.
In other words,Based on the recommended retail price of 2 yuan per bottle of 550ml of bottled water, Nongfu Spring earns a gross profit of 1.2 yuan for every bottle sold。 Obviously, selling water is a lucrative business.
Prior to the IPO, Chung Yung-ho held about 87.44% of Nongfu Spring's shares, including about 17.86% of the direct interest and 69.58% of the indirect interest held through Health Hall. After the IPO, Chung Yung-hyun and Health Tang will remain the controlling shareholders.
Nongfu Spring stated in the prospectus that the capital raised from this IPO will mainly be used for continuing brand building, steadily increasing distribution breadth and single-store sales, further expanding production capacity, increasing investment in basic capacity building, andExplore overseas market opportunities.