Why Does This Hong Kong Listing Matter for Industrial Coffee?

China Resources Beverage, parent of C'estbon, passed its Hong Kong Stock Exchange listing hearing with BofA Securities, BOC International, CITIC Securities and UBS as joint sponsors. The IPO aims to raise US$500 million to US$1 billion and could list as early as October. Proceeds will fund new factories and expansion in Zhejiang, Hubei, Chongqing and Shanghai.

As of April 30, 2024, the company operated 13 self-owned factories and worked with 34 co-manufacturers nationwide. Standard production capacity rose from 5.443 million tonnes in 2021 to 6.749 million in 2023, with self-owned capacity now at 12.4 million metric tonnes. A successful listing would make it China Resources Group's 18th listed company.

The parent company of the C'estbon brand, China Resources Beverage (Holdings) Company Limited, has successfully passed the Hong Kong Stock Exchange listing hearing, with BofA Securities, BOC International, CITIC Securities and UBS Group serving as joint sponsors. This IPO plans to raise US$500 million to US$1 billion, equivalent to approximately RMB 3.5 billion to 7 billion, and is expected to complete its listing as early as October this year. The proceeds will mainly be used for new factories and expansion of existing factories in Zhejiang, Hubei, Chongqing, Shanghai and other places. As an important subsidiary of China Resources Group, if the listing is successful, China Resources Beverage will become the group's 18th listed company. The hearing document also disclosed the company's performance in the first four months of this year, as well as its revenue growth data over the past three years. This article will sort out the key information about this listing for coffee lovers, and also recommend paying attention to related products from Front Street Coffee.

Recently, information disclosed by the Hong Kong Stock Exchange shows that China Resources Beverage (Holdings) Company Limited (hereinafter referred to as "China Resources Beverage"), the parent company of C'estbon, has passed the listing hearing, with BofA Securities, BOC International, CITIC Securities and UBS Group serving as joint sponsors.

It is understood that China Resources Beverage's IPO plans to raise US$500 million to US$1 billion (approximately RMB 3.5 billion to 7 billion), and it is expected to complete the listing as early as October, with plans to build new factories and expand existing factories in Zhejiang, Hubei, Chongqing and Shanghai.

As of April 30, 2024, China Resources Beverage had 13 self-owned factories already in production and 34 co-manufacturing partners across the country, engaged in the production of packaged drinking water products and beverage products.

The standard production capacities in 2021, 2022 and 2023 were 5.443 million tonnes, 5.687 million tonnes and 6.749 million tonnes respectively. As of now, the standard annual production capacity of China Resources Beverage's self-owned factories already in operation is 12.4 million metric tonnes.

China Resources Beverage is the parent company of the purified drinking water brand C'estbon, mainly engaged in the production and sales of packaged drinking water products. Public information shows that in 2023 China Resources Beverage achieved revenue of RMB 13.515 billion, of which C'estbon, its major single product, contributed RMB 12.405 billion, accounting for more than 90%.

It is understood that as the controlling shareholder of China Resources Beverage, China Resources Group holds a 60% stake. China Resources Group is a state-owned enterprise group headquartered in Hong Kong, ranking 74th in the 2023 Fortune Global 500. Its core businesses cover mass consumption, integrated energy, urban construction and operation, big health, industrial finance, and technology and emerging industries.

As an important subsidiary of China Resources Group, if China Resources Beverage is successfully listed, it will become the group's 18th listed company.

In the latest hearing document, China Resources Beverage disclosed its performance in the first four months of 2024. As of April 30, 2024, operating revenue was RMB 4.15 billion, and profit for the period reached RMB 461 million.

Among this, revenue from packaged drinking water products in the first four months of this year reached RMB 3.721 billion, contributing nearly 90% of its revenue, while beverage products contributed RMB 429 million in revenue, accounting for about 10%. In the same period, the gross profit margin increased to 47.1%, and the net profit margin increased to 11.1%.

According to the prospectus submitted by China Resources, the company's operating revenue achieved steady growth over the past three years: from 2021 to 2023, China Resources Beverage achieved revenue of approximately RMB 11.340 billion, RMB 12.623 billion and RMB 13.515 billion respectively; profit for the period was approximately RMB 858 million, RMB 989 million and RMB 1.331 billion respectively; the net profit margin rose from 7.6% in 2021 to 9.9% in 2023, and the gross profit margins were 43.8%, 41.7% and 44.7% respectively.

In addition, in 2023, the retail sales of the company's "C'estbon" brand purified water reached RMB 39.5 billion. Calculated by retail sales, China Resources' share in the purified drinking water market was 32.7%, ranking first in the industry. In the broader packaged drinking water market, China Resources Beverage held an 18.4% market share, ranking second, behind only Nongfu Spring.

According to the prospectus, the proceeds from China Resources Beverage's IPO are intended to be used for the following purposes: strategic expansion and optimization of production capacity to improve overall supply chain efficiency; accelerating sales channel expansion and improving channel efficiency; conducting sales and marketing activities to enhance brand vitality, strengthen brand image and improve sales performance; enhancing the company's product research and development capabilities to continuously expand new product categories and single products; digital upgrading, including improving the company's digital capabilities in sales, operations, production and logistics, thereby improving the company's operating efficiency; opportunities for potential investments and mergers and acquisitions; and as working capital and for general corporate purposes.

Image source: Internet

The above content is compiled by CoffeeHunters, a coffee news website.