Dingge reduced its holdings and cashed out 1.955 billion! Dongpeng Beverage, what's wrong?

Reducing holdings, cashing out, what happened to Dongpeng Special Drink?

In 2003, Dongpeng Industrial, a Shenzhen state-owned enterprise on the verge of bankruptcy, was acquired by Lin Muqin.

At that time, when Red Bull was selling well, Lin Muqin saw the opportunity behind it and followed Red Bull to launch a functional special drink "Dongpeng Special Drink".

The packaging of PET bottles, the price of less than 3 yuan per bottle, and the overwhelming advertisement of "tired and sleepy, drink Dongpeng Special Drink", made Dongpeng Special Drink finally successfully counterattack Red Bull, and the market share of Dongpeng Special Drink will reach 31.7% in 2021, surpassing Red Bull to become the first in the market.

As a company that started with imitation of Red Bull and was once on the verge of bankruptcy, perhaps not many people could have imagined that Dongpeng Beverage could achieve today's achievements.

Judging from the financial report, 94% of Dongpeng Beverage's revenue in the first half of 2023 comes from the sale of Dongpeng Special Drink, which shows that Dongpeng Special Drink, a functional drink, is still the absolute "big head" of Dongpeng Beverage.

In recent years, on the one hand, Dongpeng Beverage has begun to face the "hard steel" Red Bull and directly launched the "China Gold Can" packaging, which is obvious that Dongpeng Special Drink wants to directly replace Red Bull; on the other hand, Dongpeng Beverage is also actively cultivating new products and looking for a "second growth curve".

However, these two goals of Dongpeng Beverage have not been achieved now, but the stock price is standing still and continuous reduction, which makes the market more worried and concerned about the future of Dongpeng Beverage.

The performance is to the left, and the stock price is to the right

On January 30, Dongpeng Beverage disclosed its performance forecast for 2023.

According to the announcement, Dongpeng Beverage is expected to achieve operating income of 11.057 billion yuan to 11.312 billion yuan in 2023, a year-on-year increase of 30% to 33%, and it is expected to achieve a net profit attributable to the parent company of 1.989 billion yuan to 2.061 billion yuan in 2023, a year-on-year increase of 38% to 43%. Obviously, this is a brilliant financial report.

From the perspective of the extended cycle, the performance of Dongpeng Beverage has actually grown steadily in recent years. From 2020 to 2022, Dongpeng Beverage achieved revenue of 4.959 billion, 6.978 billion and 8.505 billion respectively, with revenue growth rates of 17.81%, 40.72% and 21.89% respectively, and net profits of 812.1 million, 1.193 billion and 1.441 billion respectively, with net profit growth rates of 42.32%, 46.9% and 20.75% respectively.

Although the performance is outstanding, the share price of Dongpeng Beverage has not followed higher.

As of the close of trading on February 8, Dongpeng Beverage's share price closed at 173.99 yuan / share, with a total market value of 69.6 billion, from 2022 to February 8, 2024, Dongpeng Beverage's share price rose by -2.44%, and the stock price has been "standing still" for more than 2 years, and if compared with the highest point of 280.7 yuan / share in 2021, Dongpeng Beverage's share price has still fallen by about 30%, and the performance is far less impressive.

Why does Dongpeng Beverage's stock price continue to "stand still"? This may be related to the reduction of shareholder holdings. Just before the disclosure of the performance forecast, Dongpeng Beverage issued an announcement on the reduction of holdings - the company's shareholder Junzheng Investment plans to reduce its holdings of the company by centralized bidding and block trading due to its own capital needs, with a total of no more than 12,000,300 shares, and according to the closing price of 162.9 yuan per share on the announcement date, Junzheng Investment can cash out 1.955 billion yuan in top price reduction.

According to the data of media statistics, in recent years, Dongpeng Beverage has been reduced by major shareholders and executives many times, such as Junzheng Investment, which wants to reduce its holdings recently, has thrown out 4 shareholding reduction plans in the past three years, and the first three times have cashed out a total of 929 million yuan;In May 2023, Dongpeng Beverage shareholders and directors, supervisors and senior executives collectively reduced their holdings, and at the same time, 13 shareholders and directors, supervisors and senior executives announced that they would reduce their shareholdings, and finally this reduction has a total of nearly 1.4 billion yuan.

In general, major shareholders and company executives are the ones who know the company's business best. Judging from the financial report, Dongpeng Beverage's performance is in a stage of steady growth, with annual revenue and net profit growth rates of more than 10%, why should major shareholders and company executives be in a hurry to reduce their holdings? What are they worried about?

How to break through?

When it comes to the problem of Dongpeng Beverage, the first thing that is mentioned is basically "product simplification".

This is indeed true. According to the financial report, in the first half of 2023, it will achieve revenue of 5.135 billion yuan in the sales of Dongpeng Special Drinks, accounting for 94.04% of the revenue, and 320 million yuan in the sales of other beverages, accounting for 5.86% of the revenue. It is not difficult to find that Dongpeng Beverage is still highly dependent on the big single product of Dongpeng Beverage.

In order to reduce the dependence on Dongpeng Special Drink, Dongpeng Beverage is actively promoting product diversification. At the 2023 annual summary meeting of Dongpeng Beverage Group, Chairman Lin Muqin proposed that "Dongpeng Beverage will fully implement the 1+6 multi-category strategy and build a leading beverage group in China".

However, in addition to the problem of "product simplification", the bigger problem of Dongpeng Beverage is that it has not yet gotten rid of the dependence on "imitation".

It is not difficult to find from the diversified products of Dongpeng Beverage that most of the products still imitate some "explosive products" in the existing market, such as Dongpeng Beverage's "Hydration", "Pengyou Tea", "Dongpeng Big Coffee", "VIVI Cocktail" and other new products, which have obvious benchmarking products on the market, in other words, Dongpeng Beverage is still taking the "old road".

From the perspective of R&D investment, Dongpeng Beverage also lacks the "research spirit". As a large enterprise with a market value of nearly 70 billion, Dongpeng Beverage's R&D investment in the first three quarters of 2023 is only 43.14 million, and the total operating cost of Dongpeng Beverage in the current period is 6.758 billion, accounting for 0.64% of the total operating cost.

If it continues to follow the previous "old road", Dongpeng Beverage can only take the low-price competition mode. And at present, many of Dongpeng Beverage's products have fallen into a "low price dilemma".

For example, Dongpeng Hydration is benchmarked against Alien Electrolyte Water, the latter is about 5.4 yuan per bottle in Jingdong, and Dongpeng Hydration is about 3.3 yuan per bottle, and the net content is higher than that of Alien. Dongpeng coffee benchmarks Nestle bottled coffee, the latter Jingdong box price is about 4.9 yuan per bottle, Dongpeng coffee is about 4.2 yuan per bottle, but the net content of Nestle latte is 268 ml, Dongpeng coffee has 330 ml, it can be seen that Dongpeng's products are generally about 20% lower than the benchmark products.

Dongpeng Beverage has said that it will sprint to 20 billion in the future and enter the top 5 of China's beverages. As a beverage giant with a market value of nearly 70 billion, it may need to break through in many aspects to open up a larger market.