HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

China Resources Beverage / Equity Capital Markets

<ul>
<li>Nongfu Spring is able to take a price war to grab market share,but the strategy of CR Beverage forced to cut prices may not work,making its profit margin further decline.</li>
<li>CR Beverage’s business model is “single business + scale expansion”, worse than “multi-category structure + new product incubation”.Future performance growth may inevitably slow down if without the second growth curve.</li>
<li>Whether in terms of product/revenue structure, profitability, or sustainability of growth momentum, CR Beverage isn’t as good as Nongfu Spring. Valuation of CR Beverage should be lower than Nongfu Spring.</li>
</ul>


Nongfu Spring is able to take a price war to grab market share,but the strategy of CR Beverage forced to cut prices may not work,making its profit margin further decline.
CR Beverage’s business model is “single business + scale expansion”, worse than “multi-category structure + new product incubation”.Future performance growth may inevitably slow down if without the second growth curve.
Whether in terms of product/revenue structure, profitability, or sustainability of growth momentum, CR Beverage isn’t as good as Nongfu Spring. Valuation of CR Beverage should be lower than Nongfu Spring.


Pre-IPO China Resources Beverage (PHIP Updates) - Some Points Worth the Attention

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-resources-beverage" target="_blank" data-smartkarma-citation="entities:41984:1" rel="noopener">China Resources Beverage (CRB HK)</a>, China's largest purified drinking water company, has received HK listing approval for a US$1 billion IPO.    </li>
<li>CR Beverage has a product portfolio of 13 brands, including C’estbon, Zhi Ben Qing Run, Mi Shui Series, Holiday Series and Zuo Wei Cha Shi, comprising 56 SKUs.</li>
<li>The bull case rests on a large TAM, a core business in good health, beverages providing the second growth leg, profitability, and strong cash conversion.</li>
</ul>



China Resources Beverage (CRB HK), China's largest purified drinking water company, has received HK listing approval for a US$1 billion IPO.    
CR Beverage has a product portfolio of 13 brands, including C’estbon, Zhi Ben Qing Run, Mi Shui Series, Holiday Series and Zuo Wei Cha Shi, comprising 56 SKUs.
The bull case rests on a large TAM, a core business in good health, beverages providing the second growth leg, profitability, and strong cash conversion.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-resources-beverage" target="_blank" data-smartkarma-citation="entities:41984:1" rel="noopener">China Resources Beverage (CRB HK)</a>, China's largest purified drinking water company, has received HK listing approval for a US$1 billion IPO.</li>
<li>In <em><strong><a href="https://www.smartkarma.com/insights/cr-beverage-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:157572" rel="noopener">CR Beverage IPO: The Bull Case</a>,</strong></em> we highlighted the key elements of the bull case. In this note, we outline the bear case.</li>
<li>The bear case rests on core business' pricing pressure, a slow pace of revenue diversification, a sizeable pre-IPO dividend, and margin and FCF generation below its key peer. </li>
</ul>



China Resources Beverage (CRB HK), China's largest purified drinking water company, has received HK listing approval for a US$1 billion IPO.
In CR Beverage IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on core business' pricing pressure, a slow pace of revenue diversification, a sizeable pre-IPO dividend, and margin and FCF generation below its key peer. 


Analyst

Steve

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/uni-president-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14927:1" rel="noopener">Uni President China (220 HK)</a>, a F&amp;B company in China, has an impressive track record of paying near 100% or over 100% of net profit in dividends since 2018. </li>
<li>The company has two segments, food (mainly instant noodle), and beverage.  Overall sales grew 1% yoy in 2023 while net profit jumped 36% yoy. </li>
<li>Given the reasonable valuation (13x forward PE), a near 40% net cash position, and most importantly a stable 8% dividend yield, the stock looks attractive.</li>
</ul>



Uni President China (220 HK), a F&amp;B company in China, has an impressive track record of paying near 100% or over 100% of net profit in dividends since 2018. 
The company has two segments, food (mainly instant noodle), and beverage.  Overall sales grew 1% yoy in 2023 while net profit jumped 36% yoy. 
Given the reasonable valuation (13x forward PE), a near 40% net cash position, and most importantly a stable 8% dividend yield, the stock looks attractive.


Uni-President China (220 HK):  8% Dividend Yield Looks Sustainable

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of March 8th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight flows for thre stocks, Meituan, China Mobile, and CNOOC.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of March 8th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for thre stocks, Meituan, China Mobile, and CNOOC.


Hong Kong Connect Flows (Mar 8th): Meituan, China Mobile, CNOOC

China

Uni-President China Holdings Ltd. is an investment holding company primarily engaged in the manufacturing and sale of food and beverages in the People's Republic of China. Its product portfolio includes instant noodles, tea drinks, juices, milk tea, coffee, and bottled water. The company was founded in 1992 and is headquartered in Shanghai, China.

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Uni-President China (220 HK)

Pre-IPO China Resources Beverage (PHIP Updates) - Some Points Worth the Attention

Valuation performance of CR Beverage after listing in HK would be a challenge. Single business structure/price war/fierce competition will lead to...

Xinyao (Criss) Wang

CR Beverage IPO: The Bull Case

CR Beverage, which will begin pre-marketing its IPO to raise up to US$1 billion, has filed its PHIP. CR Beverage aims to complete the deal before...

Arun George

CR Beverage IPO: The Bear Case

The bear case rests on core business' pricing pressure, a slow pace of revenue diversification, a sizeable pre-IPO dividend, and margin and FCF...

Arun George