Nongfu Shanquan Has Oversubscribed 286 Times In Two Days, And The Amount Of Fund Raised Is Less Than The Dividend. What Is The Purpose Of Listing?

On August 25, Nongfu Shanquan, the leader of "packaged drinking water", officially opened its offering on the Hong Kong stock exchange. It plans to issue more than 388 million H shares worldwide, with a price range of HK $19.50 to HK $21.50 per share, and the raised funds from HK $7.57 billion to HK $8.35 billion. The deadline for offering shares is noon on the 28th.

On the first day of subscription, nongnongfu Shanquan once "crowded" a number of securities companies' servers, recording more than 144 billion yuan of margin trading (securities companies' financing amount), equivalent to more than 247 times the over subscription of the public offering part, setting a record of new stock lending margin on the first day.

As of August 26, the margin trading of Nongfu spring has reached HK $167.674 billion, with a temporary over subscription of 286 times.

In addition, the young consumers such as Yilu water and Coca Cola have sprung up, which are worth mentioning.

In this case, whether Nongfu Shanquan's high gross profit can be sustained and whether the high P / E ratio of more than 40 times can withstand the test of the secondary market has become an interesting topic under the hot market.

A rush to raise shares

In addition, as of HK $20.6 billion, the total amount raised by Citigroup securities was HK $20.6 billion, and the latest financing amount of HK $20.6 billion was raised by CITIC Securities, and the latest financing amount of HK $20.6 billion was raised by CITIC Securities. Another HK $7 billion has been raised by King's securities, and HK $6 billion and HK $4.649 billion respectively by Shifu finance and Livermore.

The total share capital of Nongfu mountain spring is 11.188 billion shares. According to the issue price, the market value has reached 240.5 billion Hong Kong dollars, about 215 billion yuan. According to the net profit of 4.954 billion yuan in 2019, the PE multiple of Nongfu mountain spring is 43 times.

Why does Shanquan make investors feel a little sweet?

On August 26, Xu Yibin, executive director and chief executive of yaocai securities, pointed out in an interview with the 21st century economic news reporter that "since there were not many new shares listed this month, the last one was tiger Pharmaceutical (03347. HK), and there were no other shares to be offered together or later, there was no stock offering with its collision period. Therefore, Nongfu Shanquan's response to the IPO was enthusiastic, driving a large number of investors who had previously subscribed for new shares Investors who have joined the subscription are flocking to it, and they are making bigger bets.

In addition, a person from a listed company on a + H platform told the 21st century economic report that "the IPO application of Hong Kong stock mainly depends on the company's recognition and the issuing price of new shares. Nongfu Shanquan's recognition in the field of consumer goods is relatively wide. In addition, the cornerstone investors of new share subscription are also an observation dimension. If there are well-known institutional platforms, they will be more popular with investors".

According to Nongfu Shanquan's announcement, its cornerstone investors include fidelity interna ? ionic, coatue, Singapore Government Investment Corporation (GIC), and China's state-owned enterprise restructuring fund.

From the fundamental point of view, the prospectus on August 16 showed that the revenue (income) of Nongfu mountain spring from 2017 to 2019 were 17.491 billion yuan, 20.475 billion yuan and 24.021 billion yuan respectively, with a compound annual growth rate of 17.2%; the net profit in the recent three years was 3.386 billion yuan, 3.612 billion yuan and 4.954 billion yuan, respectively, with an annual compound growth rate of 21.0%.

At present, Nongfu mountain spring has 12 production bases, a total of 144 packaging drinking water and beverage production lines, 7 fresh fruit juicing lines and 3 fresh fruit production lines.

"We don't produce water, we're just the porters of nature." this widely circulated slogan, to a certain extent, reflects the products of Nongfu mountain spring.

In terms of income composition, "packaged drinking water" is the cornerstone of Nongfu spring's performance, contributing nearly 60% of its income.

"Packaged drinking water" accounted for 57.9%, 57.5%, 59.7%, 56.5% and 61.9% of its total revenue in 2017, 2018 and 2019, and the five months ended May 31, 2020, respectively.

In addition, in the field of tea drinks, Nongfu mountain spring has launched a series of "tea π" and traditional Chinese tea "Oriental leaves"; in the field of functional drinks, "scream" and "Lidi vitamin water"; in addition, there are low concentration juice "water soluble C100", medium concentration juice "Nongfu orchard" and non concentrated and reduced pure juice, including "Nongfu mountain spring" NFC juice system And "17.5 degree" juice series.

According to the prospectus, the sales cost of Nongfu spring comes from raw materials (PET), packaging materials, manufacturing expenses, salary of production personnel, water intake and treatment cost. Taking 2019 as an example, the sales cost accounts for 27.6%, 5.8%, 8.5%, 2.1% and 0.6% of the total income respectively, accounting for 44.6% of the total income, resulting in its comprehensive gross profit rate far higher than the average level of the industry.

From 2017 to 2019, the comprehensive gross profit margin of Nongfu mountain spring has been stable at more than 50%. Taking 2019 as an example, the gross profit rate of packaged drinking water products of Nongfu mountain spring is 60.2%. In addition, the gross profit rate of tea drinks, functional drinks and juice drinks are 59.7%, 50.9% and 34.7%, respectively.

Nongfu Shanquan pointed out in the prospectus that "from 2017 to 2019, our income and gross profit showed an increasing trend, mainly due to the increase of sales of our products, especially the sales of packaged drinking water products. During the past record period, our gross profit margin and net profit margin fluctuated slightly, mainly due to changes in the average purchase price of pet, the main raw material used in our products, and the impact of our product portfolio. ".

Competition intensifies in sub circuit

Although packaged drinking water won the first place in the market share, the other products of Nongfu spring, such as functional drinks, tea drinks and fruit juice drinks, have only gained the third largest market share. In the soft drink industry with numerous leading enterprises, can Nongfu mountain spring continue to dominate?

"Nongfu mountain spring is still a domestic beverage stock, and it is easy to find similar products in the market. It is not unique in the industry. Therefore, it can not be compared with that of the past SIMORE, Pegar or tiger pharmaceutical. Investors can only regard it as domestic demand shares. Moreover, the long period of the IPO of Nongfu spring will lead to a higher interest cost for margin trading. If customers subscribe in large amount and distribute less, May be due to the rise in costs, the stock price will have to rise a lot to recover the cost. " Xu Yibin stressed this point in an interview.

From the perspective of Hong Kong stock market, Master Kong Holdings (0322. HK), whose business is relatively close, has a current total market value corresponding to 18 times PE. However, the beverage business of Master Kang is not the absolute main force. The instant noodle business accounts for nearly half of the total revenue. It is worth mentioning that in the first half of this year, the profit of Master Kang's beverage business decreased slightly due to the impact of the epidemic situation. The overall income of the beverage business was 17.617 billion yuan, down 4.09% year-on-year.

According to frost Sullivan report, China Resources Yibao, which is also a drinking tap, occupies the second place in the retail sales volume of RMB 25.05 billion in 2019, second only to Nongfu mountain spring.

Since 2017, China Resources Yibao has shifted its focus to the non-aqueous "beverage camp". According to media reports, the R & D investment of China Resources Yibao in the past three years totaled 47 million yuan, and the new products developed contributed nearly 400 million yuan in revenue, with revenue of 252 million yuan in 2019 alone.

In addition, in addition to many old soft drink enterprises, "intruder" Yuanqi forest has won a place.

Yuanqi forest, founded in 2016, is an Internet + beverage company. In this year's "618 shopping Carnival", Yuanqi forest has defeated Coca Cola and Pepsi and won the champion of tmall drinks.

According to media reports, Yuanqi forest is about to complete a new round of financing, and its post investment valuation has soared from RMB 3.75 billion in 2019 to US $2 billion (about RMB 14 billion). The investors include Sequoia China and Yuansheng capital.

On August 26, Yuanqi forest pointed out to the reporter of the 21st century economic report that "at present, the company has five categories of bubble water, burning tea, milk tea, energy drinks and yogurt. Bubble water and burning tea are the leading products. In the future, the company will continue to make efforts in product research and development, expand new products and expand new tastes."

"The consumption habits of contemporary young people tend to be more and more personalized and diversified. Therefore, the excess profits in this field will surely attract more game breakers to join in to compete for young customers. Yuanqi forest has already explained this trend. Whether the industry leader can withstand this impact is also the main topic after Nongfu Shanquan is listed." An industry analyst pointed out.

On the eve of IPO, Nongfu Shanquan's surprise dividend of 9.598 billion yuan also met with doubts about its "listing motivation".

According to the prospectus, in 2019, Zhong Fu directly or indirectly held 87.4% of the shares of Nongfu Shanquan, and the company paid a dividend of 9.598 billion yuan to shareholders, which in theory earned nearly 8.3 billion yuan. In March 2020, Nongfu Shanquan announced again that it would pay a dividend of 900 million yuan in April.

"Compared with the two sides, the amount of financing may not be able to catch up with the dividend money. Obviously, it is difficult to say that the listing of the company is for financing. With the huge investment in advertising and the popularity obtained by Nongfu Shanquan, it is not tenable to improve the popularity through listing. In this case, Zhong's motivation to go to the capital market has become very intriguing." A person in Shanghai's capital market expressed confusion.

And the answer behind this, perhaps only Zhong fan is the most clear.

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