According to the information on the official website of the Hong Kong Stock Exchange, China Resources Beverage, the parent company of "Cestbon", applied for listing in Hong Kong. The joint sponsors are Bank of China International, CITIC Securities, Bank of America Merrill Lynch and UBS.
China Resources Beverage's drinking water brand "Cestbon" (Image source: China Resources Beverage's official website)
As a company under China Resources Group that focuses on ready-to-drink soft drinks, it not only sold more than 14.6 billion bottles of "Cestbon" brand aquatic products in one year, but also reached a company valuation of US$2.5 billion (about 18 billion yuan at the current exchange rate) in 2022.
In the prospectus, China Resources Beverage quoted a CIC consulting report showing that China Resources Beverage is currently the second largest packaged drinking water company in China and the largest drinking water company in China. In 2023, in terms of retail sales, CR Beverage ranked fifth among ready-to-drink soft drink companies in China.
China Resources Beverage's revenue in the past three years.
"Selling water" contributes more than 9% of the income
According to the prospectus, in 2023, China Resources Beverage sold more than 14.6 billion bottles of Cestbon brand aquatic products, with retail sales reaching RMB 39.5 billion. In 2023, CR Beverage's market share in the packaged drinking water market and the purified drinking water market will be 18.4% and 32.7%, respectively.
The revenue and proportion of different products of China Resources Beverage.
Judging from the financial report, in 2021, 2022 and 2023, the revenue of China Resources Beverage Packaged Drinking Water Products will be about 10.818 billion yuan, 11.906 billion yuan and 12.447 billion yuan respectively, and the revenue of other beverage products will be 522 million yuan, 717 million yuan and 1.351 billion yuan respectively.
Among them, China Resources beverage packaged drinking water products accounted for 92.1%, and other beverage products accounted for less than 8% of the revenue. Judging from such a gap in product structure, CR Beverage is more like a packaged water company. However, there is no shortage of differentiated products under CR Beverage.
From the prospectus, we found that as of now, CR Beverage mainly has a product portfolio of 13 brands such as "Cestbon", "Zhiben Qingrun", "Honey Water Series", "Holiday Series" and "Zuowei Tea", with a total of 56 SKUs. In 2023, CR ranked among the top 10 in the Chinese market in terms of market share in core ready-to-drink soft drinks such as tea beverages, fruit juice beverages and coffee beverages, ranked first in China's chrysanthemum tea beverage market, and ranked second in the flavored water market.
The best performer in the beverage sector is Ben Qingrun. This subdivision attribute product focusing on China's chrysanthemum tea beverage has not only ranked first in the market, but also the retail sales of its chrysanthemum tea products will reach 756 million yuan in 2023. Judging from the proportion of single product explosion and sales, beverage products have very little say in the company's performance.
The product utilization rate is only 7%, and the degree of dependence on third parties is significant
The reporter found in the prospectus that as of December 31, 2023, China Resources Beverage has 12 self-owned factories and 34 cooperative production partners in China that have been put into operation, producing packaged drinking water and beverage products. As of the same period, the total annual standard production capacity of packaged drinking water and beverage products from its own factories and cooperating production partners was 18.8 million metric tons. In 2023, the actual total annual production of packaged drinking water and beverage products of CR Beverage in 2023 will be approximately 13.5 million metric tons. Based on this calculation, we find that the company's capacity utilization rate is about 71.81%.
China Resources Beverage Production Plant.
According to the information disclosed in the prospectus, in 2021, 2022 and 2023, the annual production capacity of China Resources Beverage will be 16.9 million metric tons, 17.6 million metric tons and 18.8 million metric tons, respectively. Among them, the standard annual production capacity of the self-owned plants that have been commissioned is 5.4 million metric tons, 5.7 million metric tons and 6.7 million metric tons, respectively, and the available annual production capacity of cooperative production partners is 11.5 million metric tons, 12 million metric tons and 12 million metric tons, respectively.
It is not difficult to see from this that China Resources Beverage is not at full production. For 2023 alone, there is a gap of 5.25 million metric tons between actual production and design capacity, which is almost close to the standard annual capacity of its own plants. Despite this, China Resources Beverage still needs to raise funds to expand production. According to the prospectus, the company plans to raise funds for strategic expansion and optimization of production capacity.
China Resources Beverage's explanation on the use of funds.
In addition to raising funds to expand production, another disclosure in the prospectus also revealed that its product manufacturing is more dependent on third parties. As of December 31, 2023, the company had 47 self-owned production lines and 81 production lines owned by cooperative production partners.
Before submitting the materials, China Resources Group is the biggest beneficiary of the "surprise" dividends
According to the reporter's understanding, the time for the Hong Kong Stock Exchange to disclose the prospectus materials of China Resources Beverage was April 22, and just the day before, China Resources Beverage had just approved the board of directors to declare a dividend of 2.5 billion yuan to existing shareholders. For this kind of surprise dividend behavior, the regulatory authorities have long been strictly ordered.
The recent development of CR Beverage and the absence of any material adverse changes are explained.
In fact, the regulatory authorities have long issued relevant regulations and paid close attention to the behavior of raising funds to supplement liquidity while raiding "clearance dividends" on the eve of listing. However, it is encouraging for listed companies to implement a stable and continuous dividend policy, after all, the dividend policy helps to stabilize market expectations and improve investors' sense of gain.
In the prospectus, the reporter also found that as of December 31, 2023, the cash and cash equivalents held by China Resources Beverage were RMB 2.075 billion, plus the balance of fixed bank deposits totaling about RMB 5.9 billion. As of the same period, the company's retained profit was about 6.4 billion yuan. CR Beverage said in the prospectus that the remaining retained profits will be used for corporate development or shared with shareholders after the IPO.
Prior to this listing, China Resources Group and Plateau owned 60% and 40% of the interests of China Resources Beverage, respectively. Among them, China Resources Group is a state-owned enterprise group headquartered in Hong Kong. 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, including China Resources Beer, China Resources Power, China Resources Land, etc. It can be seen that China Resources Group has 17 companies listed. This also means that once China Resources Beverage is successfully listed, China Resources Group will gain another star IPO. (Source: Poster News)