Shareholders with excellent performance reduce their holdings
60 billion beverage giant faces the pull of fate
On the one hand, Dongpeng Beverage's market share continues to expand and the company's performance steadily improves; on the other hand, shareholders and executives have reduced their holdings due to reliance on large single products.
"When you are tired and sleepy, drink Dongpeng special drink." This brainwashing slogan of Dongpeng Beverage (605499.SH) has left a deep impression on many consumers.
Red Star Capital Bureau noticed that on the evening of January 25, 2024, Dongpeng Beverage issued an announcement stating that the company’s second largest shareholder Tianjin Junzheng Venture Capital Partnership (Limited Partnership) (referred to as “Junzheng Investment”) will conduct a bidding transaction. and large-scale shareholding reduction methods, reducing shareholdings not exceeding 3% of the company's total share capital.
This is the fourth time that Junzheng Investment has launched a shareholding reduction plan since May 2022. On January 26, 2024, Dongpeng Beverage fell more than 6% during the session. As of the close of the day, it fell 1.5%. The stock price was reported at 162.9 yuan, with a total market value of 65.162 billion yuan.
On the evening of January 26, Dongpeng Beverage immediately issued a pre-performance announcement: In 2023, it is expected to achieve operating income of 11,057 million yuan to 11,312 million yuan, a year-on-year increase of 30% to 33%; it is expected to achieve net profit attributable to the owners of the parent company Between 1,989 million yuan and 2,061 million yuan, a year-on-year increase of 38% to 43%.
Whether the excellent performance can withstand the shareholders' sell-offs, Dongpeng Beverage will face the test of the market when the market opens today.
Rise of brainwashing marketing + price war
When it comes to functional drinks, the first thing some consumers think of is Red Bull.
In 1995, Thai Red Bull, Thai Tencel and Reignwood Group established a joint venture to introduce the Red Bull series of beverages to the Chinese market; subsequently, Red Bull became the absolute leader in the market. Public information shows that Red Bull’s market share in China exceeded 80% in 2012, and its sales in 2014 exceeded 20 billion.
However, since 2016, Thailand's Tencel has initiated a trademark infringement lawsuit against Reignwood Red Bull, arguing that the trademark license agreement between the two parties was for 20 years instead of 50 years. As a result, the two companies launched a long-term litigation "tug of war."
The industry leader is busy with trademark disputes, giving Dongpeng Beverage an opportunity.
The product Dongpeng Special Drink has been around for a long time, but it was not the business focus of Dongpeng Beverage before. It was not until 2009 that Dongpeng Beverage launched bottled Dongpeng Special Drink, and since then it has accelerated its national exploration.
In terms of price, Dongpeng Special Drinks focuses on cost-effectiveness. Taking Tmall supermarket prices as an example, for the same 250 ml/bottle product, the price of Red Bull after the event is about 4.5 yuan/bottle, while the post-event price of Dongpeng Special Drink is about 2.1 yuan.
In terms of marketing, in 2013 Dongpeng Special Drinks signed Nicholas Tse as the brand spokesperson and placed advertisements during the prime time period of CCTV news. At the same time, Red Bull stopped using the slogan "Drink Red Bull when you are thirsty, drink Red Bull when you are sleepy and tired", and Dongpeng Special Drink launched the slogan "Drink Dongpeng Special Drink when you are tired and sleepy" to repeatedly brainwash people.
In 2015, Dongpeng Special Drinks launched a campaign to win red envelopes by scanning the QR code on bottle caps. In addition, Dongpeng Special Drinks has also been seen in sports events, variety show sponsorships, etc.
In 2019, Dongpeng Special Drinks launched "ground advertising" that is closer to consumers. A total of more than 1,800 buses, more than 1,700 bus shelters, more than 400 T-plates and more than 2,800 walls were placed outdoors throughout the year, forming a strong brand memory for consumers of "drink Dongpeng special drink when you are tired and sleepy" .
Thanks to the combination, Dongpeng Special Drinks continues to grow in the domestic functional beverage market. According to the Nielsen IQ report, Dongpeng Special Drink has ranked first among energy drinks in China for two consecutive years in 2021 and 2022, and ranked second in sales.
Qiuchange’s diversified business has not yet released a hit product
The financial report shows that in recent years, Dongpeng Special Drinks has contributed more than 90% to the company’s revenue.
An excessively single revenue structure will expose companies to operational risks. On March 3, 2023, Lin Muqin, chairman of Dongpeng Beverage, publicly stated: "In the next three years, we must cultivate and develop a second growth curve. We cannot have a flat mentality."
On January 15, 2024, Dongpeng Beverage announced the launch of three new "VIVI cocktails" with an alcohol content of 8 degrees and a recommended retail price of 9 yuan per can.
Currently, these three new alcoholic products have been put on the shelves of the Dongpeng Beverage Tmall flagship store. The retail price per box (15 cans*500ml) is 129.3 yuan, and the discounted price is 109.91 yuan, which means the price per can is approximately 7.3 yuan.
However, from a sales perspective, sales of related products have only been in double digits since launch.
In addition, in 2023, Dongpeng Beverage also launched a variety of products such as electrolyte drinks, coconut milk, honey green tea, and sugar-free tea; in 2021, Dongpeng Beverage also launched sparkling water, ready-to-drink coffee, and women's functional drinks etc.
However, among the many new products, Dongpeng Beverage has not created a real hit, and the company's diversified business still has not made much progress.
In terms of corporate R&D investment, the financial report shows that from 2020 to the first three quarters of 2023, Dongpeng Beverage’s R&D expenses were 35.5425 million yuan, 42.799 million yuan, 43.7548 million yuan, and 43.1408 million yuan respectively, and the R&D expense rates were 0.72% and 0.61 respectively. %, 0.51%, 0.50%; corporate R&D expense rates continue to decline.
Side A
Shareholders and executives reduce holdings
Two shareholders plan to cash out nearly 2 billion yuan
On the evening of January 25, 2024, Dongpeng Beverage announced that the company’s second largest shareholder Junzheng Investment will reduce its holdings by no more than 3% of the company’s total share capital through bidding transactions and bulk reductions. Calculated based on the closing price of the day and the upper limit of holding reduction, Junzheng Investment has reduced its holdings by nearly 2 billion yuan.
It is worth mentioning that before this, Junzheng Investment had sold out holding reduction plans three times on May 25, 2022, September 20, 2022, and January 20, 2023.
Among them, the first time the holding was not reduced, the second time it was reduced by 1.41137 million shares (accounting for 0.3528% of the company's total share capital), and the third time it was reduced by 3.7548 million shares (accounting for 0.9387% of the total share capital). Through the above reduction of holdings, Junzheng Investment has cashed out more than 900 million yuan in total.
In addition to the reduction of holdings by Junzheng Investment, the senior management team of Dongpeng Beverage also collectively reduced its holdings after the lifting of the ban.
On May 29, 2023, Dongpeng Beverage issued the "Announcement on Shareholding Reduction Plan for Shareholders, Directors, Supervisors and Senior Supervisors". The 13 company directors, senior supervisors and major shareholders planned to reduce their holdings in total to no more than 8.94% of the company's total share capital. Calculated based on the current stock price, corresponding The market value reaches 6 billion yuan.
According to information disclosed by the company on December 19, 2023, the above-mentioned shareholders, directors, supervisors and senior management reduced their holdings of 7.437489 shares of the company through centralized bidding and block transactions from June 20 to December 17, accounting for 1.8593% of the company’s total share capital. The total amount of reduction reached 1.369 billion yuan.
Among them, the company's chairman Lin Muqin reduced the largest number of shares; public information shows that Lin Muqin has reduced his holdings through Dongpeng Yuandao, Dongpeng Zhiyuan, Dongpeng Zhicheng and other companies, with a cumulative reduction amount of more than 1 billion yuan.
In addition, many directors, supervisors, and senior managers such as Li Dawen, Li Zengyong, Chen Yimin, Cai Yunsheng, etc. have also reduced their holdings, with a total reduction of more than 300 million yuan.
It is worth mentioning that on the day when the results of the reduction of shareholders, directors, supervisors and senior executives were disclosed, Dongpeng Beverage also disclosed that the company’s former secretary of the board Liu Lihua resigned. She also chose to reduce her stake and leave the company.
Regarding the collective reduction of shareholders and senior management teams, whether they really have capital needs or are cautious about the future development of the company has also become a concern for the market.
Side B
Beautiful earnings forecast
Revenue and net profit will increase significantly in 2023
On the evening of January 26, Dongpeng Beverage issued a pre-performance announcement. In 2023, the company once again delivered a brilliant report card. During the reporting period, the company is expected to achieve operating income of 11,057 million yuan to 11,312 million yuan, a year-on-year increase of 30% to 33% compared with 8,505.39 million yuan in the same period last year; it is expected that the net profit attributable to the owners of the parent company will be achieved in 2023. Between 1.989 million yuan and 2.061 million yuan, compared with the same period last year, it will increase by 548.48 million yuan to 620.48 million yuan, an increase of 38% to 43%.
Dongpeng Beverage said that the 2023 annual performance increase not only reflects its steady growth in traditional business fields, but also demonstrates its huge potential in product innovation, market expansion and nationalization strategy. The overall recovery of the consumer industry is not as expected. Under the environment, the company has achieved growth against the trend, which fully reflects the strong operating resilience of Dongpeng Beverage. With the continuous implementation of the company's strategy and in-depth market development, Dongpeng Beverage is steadily achieving its ambitious goal of becoming a multi-category comprehensive beverage group.
Chengdu Commercial Daily-Red Star News reporter Liu Mi
Comprehensive China Network