Introduction:China Resources Beverage has launched its Hong Kong IPO, with its subsidiary Yibao brand firmly holding the top position in China's purified water market. This IPO plans to issue 347.8 million shares, priced between HK$13.5 and HK$14.5 per share, with a fundraising scale of up to HK$5.04 billion, and is expected to be listed on October 23. This article details the China Resources Beverage IPO, its market position, use of proceeds, and includes an industry outlook.
China's packaged drinking water market is heating up the capital markets once again. Yibao’s parent company — China Resources Beverage — has officially commenced its IPO process in Hong Kong, planning to globally issue 347.8 million shares with an offering price range set between HK$13.50 and HK$14.50 per share. Based on this, the maximum fundraising amount could reach approximately HK$5.04 billion, with listing on the Main Board of the Hong Kong Stock Exchange expected on October 23.
As the second-largest supplier of packaged drinking water in China, China Resources Beverage’s “Yibao” brand achieved retail sales of RMB 39.5 billion in 2023, firmly ranking first in China’s purified drinking water market. This IPO has also attracted participation from numerous prominent institutional investors, including UBS Asset Management, Oaktree Capital, and Boyu Capital, who have collectively subscribed for about USD 310 million, demonstrating strong market confidence in its future growth potential.
The IPO subscription period for China Resources Beverage runs from October 15 to 18, with the Hong Kong public offering portion consisting of 38.26 million shares, and the international placement portion comprising 309.565 million shares. If calculated at the highest price of HK$14.50 per share, the total fundraising will not exceed HK$5.04 billion. This IPO is jointly underwritten by UBS, BOC International, CITIC Securities, and Bank of America Securities, and is expected to bring significant capital support to the company.
In terms of cornerstone investments, China Resources Beverage has signed agreements with several major institutions, including UBS Asset Management, US-based Oaktree Capital, Hong Kong China Travel Service, China Post Insurance, and Boyu Capital. These cornerstone investors have agreed to subscribe for shares worth approximately USD 310 million (equivalent to HK$2.407 billion) at the offering price, provided certain conditions are met. Cornerstone investors are typically institutions or well-known enterprises with long-term investment perspectives. Their participation often signifies recognition of the company’s fundamentals, helps stabilize market confidence, and includes a commitment to hold their shares for 3 to 6 months post-listing.
China Resources Beverage focuses on the production and sale of packaged drinking water, with “Yibao” as its core brand. The company began production in the early 1990s and is one of China’s earliest specialized manufacturers of packaged drinking water. After nearly 40 years of development, China Resources Beverage has now become China’s second-largest packaged drinking water enterprise, as well as the largest supplier of purified drinking water in the country (based on 2023 retail sales). In 2023, the Yibao brand’s purified water products achieved retail sales of RMB 39.5 billion, maintaining a leading market position.
According to the hearing document published by China Resources Beverage in September, in the four months ending April 30, 2024, the company achieved revenue of RMB 4.15 billion, with a profit of RMB 461 million during the period. Among this, packaged drinking water products contributed RMB 3.721 billion in revenue, accounting for about 90% of total income; beverage products recorded RMB 429 million, making up around 10%. Meanwhile, the gross margin for the period further improved to 47.1%, and the net profit margin increased to 11.1%, indicating strong profitability and cost control capabilities.
Looking back over the past three years, China Resources Beverage’s financial performance has also shown steady growth. From 2021 to 2023, the company’s revenues were RMB 11.340 billion, RMB 12.623 billion, and RMB 13.515 billion respectively; profits for the periods were RMB 858 million, RMB 989 million, and RMB 1.331 billion. The net profit margin rose year-on-year from 7.6% in 2021 to 9.9% in 2023, while gross margins were 43.8%, 41.7%, and 44.7% respectively, reflecting continuous optimization in product mix and operational efficiency.
China Resources Group, the controlling shareholder of China Resources Beverage, currently holds a 60% stake. China Resources Group is a large state-owned enterprise group headquartered in Hong Kong, with business scope covering mass consumption, integrated energy, urban construction and operation, healthcare, industrial finance, and emerging technology industries. It ranked 74th in the 2023 Fortune Global 500. Upon successful listing, China Resources Beverage will become the 18th listed company under China Resources Group.
Regarding the use of the raised funds, China Resources Beverage stated that the capital will mainly be used for strategic expansion and capacity optimization, accelerating the expansion of sales channels, advancing digital transformation and upgrades, as well as evaluating potential investment and acquisition opportunities. These initiatives will help the company further consolidate its market position, enhance operational efficiency, and explore new growth drivers.
In summary, China Resources Beverage’s Hong Kong IPO is not only a significant capital event in China’s packaged drinking water industry, but also marks a new stage for the Yibao brand in moving toward internationalization and scaled development. For investors, it presents a valuable opportunity to observe the landscape of China’s drinking water industry and corporate operational models.
The above content is compiled by CoffeeHunters, a coffee news website.
