A thousand calls and a thousand words can begin!
Nongfu Spring (09633.HK)'s rival China Resources Beverage has finally launched a sprint to the Hong Kong capital market.
Finet News, on April 22, China Resources Beverage, the parent company of "Cestbon", submitted a prospectus to the Hong Kong Stock Exchange for the first time, planning to be listed on the main board of the Hong Kong Stock Exchange, with BofA Securities, Bank of China International, CITIC Securities and UBS Group as the company's joint sponsors.
At present, 8 of the subsidiaries of China Resources Group are listed on the Hong Kong Stock Exchange and 9 are listed on the A-share market. If it successfully knocks on the door of the Hong Kong Stock Exchange, China Resources Beverage will become another listed company platform under China Resources Group, becoming the 18th listed company of China Resources Group.
As a large enterprise under the State-owned Assets Supervision and Administration Commission (SASAC), China Resources Beverage has fully grasped the growth opportunities of the domestic packaged drinking water and beverage market and achieved significant enterprise scale expansion by virtue of its profound industry background and market influence.
The performance has increased steadily, and last year's revenue exceeded 13.5 billion
The history of CR Beverage can be traced back to the 80s of the 19th century, and it is one of the earliest enterprises in China to specialize in the production of packaged drinking water. CR Beverage is controlled by China Resources Group, which holds 60% of the company's shares, and the remaining 40% is controlled by Dong Yi.
CR Beverage is mainly engaged in the manufacture and sales of packaged drinking water products and beverage products, among which "Cestbon" is a drinking purified water product of CR Beverage, and the company also has beverage brands such as "Honey Water Series" and "Holiday Series". Up to now, CR Beverage has a total of 13 brands with a total of 56 SKUs.
CR Beverage is a leading enterprise in the domestic packaged water beverage market, in terms of retail sales in 2023, CR Beverage is the second largest packaged drinking water enterprise in China and the largest drinking water enterprise in China, and the retail sales of "C'estbon" brand drinking purified water products reached 39.5 billion yuan in 2023, making it the first brand in China's drinking purified water market.
Competition in the mainland packaged drinking water market is highly concentrated, with the total market share of the top five companies reaching 58.6% in 2023. As a leading enterprise in the industry, under the background of steady market growth and continuous improvement of industry concentration, CR Beverage's operating performance has been continuously improved.
According to the prospectus, from 2021 to 2023, the revenue of China Resources Beverage will be 11.34 billion yuan, 12.623 billion yuan and 13.515 billion yuan respectively, and the profit attributable to the company's owners during the year will be 858 million yuan, 990 million yuan and 1.329 billion yuan respectively.
Since 2021, the revenue of packaged drinking water products of various specifications has grown steadily, and in 2023, the revenue of packaged drinking water products will reach 12.447 billion yuan, accounting for 92.1% of the total revenue, and the remaining revenue will come from beverage products, accounting for about 7.9%.
It is worth mentioning that the profits of packaged drinking water on the market are extremely high, and a survey by NetEase Business has shown that a bottle of 550ml Nongfu Spring natural water, of which the bottle + cap + inkjet code + tape is about 0.17 yuan, the operating and advertising expenses are about 0.22 yuan, and the cost of the water itself is only 1 cent, and the bid is 0.68 yuan a bottle.
CR Beverage's packaged drinking water products have a high gross profit margin, with a gross profit margin of 45.6% in 2023, significantly higher than the gross profit margin of beverage products of 33.7% in the same period.
China Resources Beverage VS Nongfu Spring, which one is stronger?
After the recent death of Zong Qinghou, the founder of Wahaha Group, Nongfu Spring was pushed to the forefront. So, compared with China Resources Beverage, which has just disclosed its business transcript, who is the "big brother" of the packaged drinking water industry in mainland China?
Whether in terms of business scale or growth, Nongfu Spring, as a private enterprise, is obviously more competitive, and its data in all aspects is significantly better than that of China Resources Beverage.
In terms of operating performance, Nongfu Spring's revenue and net profit are far higher than those of China Resources Beverage. In 2023, Nongfu Spring's revenue and net profit will be 42.667 billion yuan and 12.079 billion yuan respectively, while the revenue and net profit of China Resources Beverage will be 13.515 billion yuan and 1.329 billion yuan respectively, and Nongfu Spring's revenue and net profit will be several times that of China Resources Beverage.
The income gap is mainly due to the fact that Nongfu Spring's income is more diversified and balanced, and the income of packaged drinking water and beverages presents a five-to-five pattern, which is different from China Resources Beverage's reliance on packaged drinking water.
In 2023, Nongfu Spring's revenue from tea beverages, functional drinks, fruit juice drinks and other products will reach RMB22.4 billion, accounting for 52.5% of revenue, while the revenue from packaged drinking water will be RMB20.262 billion, accounting for 47.5% of revenue.
Compared with growth, China Resources Beverage is also much inferior to Nongfu Spring.
From 2021 to 2023, Nongfu Spring's revenue and net profit will grow at a CAGR of 19.87% and 29.87%, respectively, while China Resources Beverage's revenue and net profit will grow at a CAGR of 9.17% and 24.46%, respectively.
In terms of gross profit margin, which measures the profitability of enterprises, Nongfu Spring's gross profit margin is more dazzling.
In the past three years, Nongfu Spring's gross profit margin was around 58%, and the gross profit margin of China Resources Beverage was around 43%, a considerable gap between the two.
Generally speaking, the gross profit margin of packaged drinking water products is higher than that of beverage products, and in this regard, China Resources Beverage's packaged drinking water revenue in 2023 will account for more than 90%, while Nongfu Spring's revenue from water products will account for less than 50%, and the rest will mainly come from ready-to-drink tea, functional drinks and fruit juice beverage products.
There are two major reasons behind the fact that the gross profit margin of Nongfu Spring is significantly higher than that of China Resources Beverage: first, the product structure of Nongfu Spring continues to move upward, especially the company's tea beverage products have a high premium ability, so the overall gross profit margin of non-packaged drinking water is not low;
In terms of market position and market layout, Nongfu Spring and China Resources Beverage are the "two heroes" in the domestic packaged drinking water market, but Nongfu Spring has a higher market share.
In terms of retail sales in 2023, the top two companies in China's packaged drinking water market are Nongfu Spring and China Resources Beverage, with market shares of 23.6% and 18.4% respectively.
In the ready-to-drink soft drinks (including drinking water, tea drinks, etc.) market, Nongfu Spring ranked third with a market share of 9.6% and China Resources Beverage ranked fifth with a market share of 4.7% in terms of retail sales in 2023.
Compete on the beverage track
Although the domestic packaged drinking water market is huge, the beverage track is also a golden track full of opportunities, and several major domestic packaged drinking water companies have entered the beverage market to varying degrees in order to get a piece of the pie.
Compared with China Resources Beverage, Nongfu Spring has a more successful layout in the beverage track, and the product structure is also more perfect, ready-to-drink tea, functional drinks and fruit juice drinks have become an important source of income and profit in addition to Nongfu Spring's packaged drinking water, and the two-wheel drive of "packaged water + beverages" has achieved remarkable results.
Nongfu Spring's success in the beverage track is due to the fact that the beverage market is full of business opportunities.
According to the CIC report, in 2023, the market size of ready-to-drink soft drinks other than packaged drinking water in mainland China will reach 694.2 billion yuan, of which the market size of tea drinks, fruit juice drinks and carbonated drinks will be 143.4 billion yuan, 124.7 billion yuan and 123.2 billion yuan respectively, all of which are 100 billion yuan market. In addition, the market growth prospects for these three sectors are relatively good, with CAGRs of 7.2%, 5.6% and 2.7% from 2023 to 2028, respectively.
In the past, CR Beverage has always relied on packaged drinking water to win the world, and more than 90% of its revenue contribution comes from drinking water, which is not as successful as Nongfu Spring in terms of business diversification. In order to improve the product structure and open up a new growth curve, CR Beverage has continued to increase its beverage track in R&D, marketing and channels in recent years.
Since 2018, CR Beverage has successively launched brands such as the flavored water brand "Honey Water Series", the fruit juice beverage brand "Holiday Series", the herbal beverage brand "Zhiben Qingrun", and the fruit juice beverage brand "Kitchen from the World", and the company's product portfolio has continued to expand.
Up to now, CR Beverage has laid out three major beverage markets, namely tea drinks, fruit juice drinks and other products. Among them, the tea beverage business includes three major brands: "Zhiben Qingrun", "Flavored Tea" and "Afternoon Milk Tea", the fruit juice beverage business includes "Honey Water Series", "Holiday Series" and "Kitchen from the World", and other products mainly include sports drink "Magic" and coffee drink "Fire Coffee".
The number of SKUs in the above three beverage series is 14, 11 and 8 respectively, accounting for nearly 60% of the company's total SKUs, and it is not difficult to see that CR Beverage's strategic focus is on the beverage market.
Beverage brands have also performed very competitively in recent years, becoming a new growth curve for CR Beverage.
From 2021 to 2023, CR Beverage's beverage products increased in volume and price, and revenue also rose, reaching RMB522 million, RMB717 million and RMB1.068 billion respectively, and retail sales grew at a compound annual growth rate of 38.6%, far exceeding the industry average of 4.0% and the growth rate of other leading companies in the same period.
However, compared with the volume of Nongfu Spring's beverage products, China Resources Beverage still needs to work hard in the beverage track. In 2023, the revenue scale of Nongfu Spring's other products (including soda drinks, lemon juice drinks, etc.) alone will exceed that of China Resources Beverage's beverage products, and the revenue scale of tea beverage products will exceed 12 billion yuan.
It is also worth noting that many of CR Beverage's beverage brands are not its own, but are licensed from its former shareholder, Kirin Holdings Co., Ltd., a multinational company, which has licensed brands such as "Afternoon Milk Tea", "Fire Coffee" and "Kitchen from the World". In the prospectus, the company pointed out that "the company's IP cooperation with the 'Kirin' brand is expected to expire in 2025, and we may reconsider the relevant arrangements for the IP cooperation, and depending on the outcome, our product portfolio may change." ”
At present, the domestic beverage track is becoming more and more volatile, and the homogenization is becoming more and more serious, how can China Resources Beverage truly embark on the dual pattern development path of "drinking water + beverage"?
Author: Far away