Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Bottom-Up

<ul>
<li>We believe the criticism against Nongfu Spring will eventually help the company.</li>
<li>Catching the trend of sugar free, tea revenue surged by 83% in 2023.</li>
<li>The company achieved higher growth and higher margin, but its stock price is still flat.</li>
</ul>


We believe the criticism against Nongfu Spring will eventually help the company.
Catching the trend of sugar free, tea revenue surged by 83% in 2023.
The company achieved higher growth and higher margin, but its stock price is still flat.


Nongfu Spring (9633 HK): Criticism Not a Concern, Strong Performance, But Flat Price, Buy

Equity Analyst

Steve Zhou, CFA

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nongfu-spring-co-ltd" target="_blank" data-smartkarma-citation="entities:28955:1" rel="noopener">Nongfu Spring (9633 HK)</a> has been trading flat since April 2021, even though earnings have grown 36% yoy in 2021, 19% yoy in 2022, and 25% yoy in 1H23.</li>
<li>We believe a forward PE lower than 35x would be a great entry price for Nongfu (37x currently), with upside potential in earnings from explosive growth in unsweetened tea.</li>
<li>A business that has a long run-way for growth, strong management, strengthening moat, great cash flow, and on top of that counter-cyclical, deserves a premium valuation anywhere in the world. </li>
</ul>



Nongfu Spring (9633 HK) has been trading flat since April 2021, even though earnings have grown 36% yoy in 2021, 19% yoy in 2022, and 25% yoy in 1H23.
We believe a forward PE lower than 35x would be a great entry price for Nongfu (37x currently), with upside potential in earnings from explosive growth in unsweetened tea.
A business that has a long run-way for growth, strong management, strengthening moat, great cash flow, and on top of that counter-cyclical, deserves a premium valuation anywhere in the world. 


Nongfu Spring (9633 HK):  Within Striking Distance

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

<ul>
<li>Giant Biogene was listed in Hong Kong IPO in 2022. It has done well since and is now trading 45% above its IPO price, but its still cheap.</li>
<li>GB is a leader in the bioactive ingredient-based professional skin treatment product industry in China.</li>
<li>In this note, we will talk about the company’s past performance and future prospects.</li>
</ul>


Giant Biogene was listed in Hong Kong IPO in 2022. It has done well since and is now trading 45% above its IPO price, but its still cheap.
GB is a leader in the bioactive ingredient-based professional skin treatment product industry in China.
In this note, we will talk about the company’s past performance and future prospects.


2024 High Conviction - Giant Biogene - Growth Rate Keeps Moving Higher

Equity Capital Markets

<div>
<p><a href="https://www.smartkarma.com/entities/nongfu-spring" target="_blank" data-smartkarma-citation="entities:28955:1" rel="noopener">Nongfu Spring (9633 HK)</a> had one of the best debuts for large IPOs last year. Despite the recent correction, the stock is still trading 92.5% above its listing price. </p>
<p>In this note, we will talk about the prospects of large trades triggered by the lock-up expiry.</p>
</div><div>
<div><p>We have covered various aspects of the company in our earlier IPO notes:</p></div>
<div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-pre-ipo-the-positives-leaves-one-thirsty-for-more" target="_blank" rel="noopener">Nongfu Spring Pre-IPO - The Positives - Leaves One Thirsty for More</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-pre-ipo-the-negatives-doesn-t-need-to-list-or-expand-production-facilities" target="_blank" rel="noopener">Nongfu Spring Pre-IPO - The Negatives - Doesn’t Need to List or Expand Production Facilities</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-pre-ipo-peer-comparison-superior-margins-and-growth" target="_blank" rel="noopener">Nongfu Spring Pre-IPO - Peer Comparison - Superior Margins and Growth</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-pre-ipo-first-stab-at-valuation" target="_blank" rel="noopener">Nongfu Spring Pre-IPO - First Stab at Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-pre-ipo-phip-updates" target="_blank" rel="noopener">Nongfu Spring Pre-IPO - PHIP Updates</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-pre-ipo-updates-to-valuation" target="_blank" rel="noopener">Nongfu Spring Pre-IPO - Updates to Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-ipo-not-cheap-by-any-measure-but-is-a-quality-name" target="_blank" rel="noopener">Nongfu Spring IPO - Not Cheap by Any Measure but Is a Quality Name</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-ipo-trading-update-strong-subscription-levels-in-a-league-of-its-own" target="_blank" rel="noopener">Nongfu Spring IPO Trading Update - Strong Subscription Levels, in a League of Its Own</a></li>
</ul></div>
</div>


Nongfu Spring (9633 HK) had one of the best debuts for large IPOs last year. Despite the recent correction, the stock is still trading 92.5% above its listing price. 
In this note, we will talk about the prospects of large trades triggered by the lock-up expiry.

We have covered various aspects of the company in our earlier IPO notes:

Nongfu Spring Pre-IPO - The Positives - Leaves One Thirsty for More
Nongfu Spring Pre-IPO - The Negatives - Doesn’t Need to List or Expand Production Facilities
Nongfu Spring Pre-IPO - Peer Comparison - Superior Margins and Growth
Nongfu Spring Pre-IPO - First Stab at Valuation
Nongfu Spring Pre-IPO - PHIP Updates
Nongfu Spring Pre-IPO - Updates to Valuation
Nongfu Spring IPO - Not Cheap by Any Measure but Is a Quality Name
Nongfu Spring IPO Trading Update - Strong Subscription Levels, in a League of Its Own



Nongfu Spring Lock-Up Could Correct the Tiny Float and Limited Trading

<ul>
<li>The growth rate of total revenue accelerated to 23% YoY in 1H23 from 15% YoY in 2H22 and 9% YoY in 1H22.</li>
<li>Tea revenue grew by 60% YoY in 1H23 as the company caught the fashion of sugar free.</li>
<li>We believe the stock has an upside of 41% for yearend 2024.</li>
</ul>


The growth rate of total revenue accelerated to 23% YoY in 1H23 from 15% YoY in 2H22 and 9% YoY in 1H22.
Tea revenue grew by 60% YoY in 1H23 as the company caught the fashion of sugar free.
We believe the stock has an upside of 41% for yearend 2024.


Nongfu Spring (9633 HK): Tea Revenue Up by 60%, 40% Upside, Buy

China

Nongfu Spring Co. Ltd. supplies soft drinks. The Company develops, produces, and sells bottled mineral water, fruit juice, sports drinks, and tea drinks. Nongfu Spring also offers barreled mineral water door-to-door services.

Nongfu Spring (9633 HK)