Mainland functional beverage leader EASTROC BEVERAGE is going public, with an entry fee of over 25,000, introducing cornerstone investors such as Tencent and Temasek

The mainland functional beverage leader Eastroc Beverage (9980) will begin its IPO today (26th) until Thursday (29th), planning to issue 40.8899 million H shares, with 10% for public offering in Hong Kong. The offer price will not exceed HKD 248, raising a maximum of HKD 10.14 billion. Each lot consists of 100 shares, with an entry fee of HKD 25,050.11. The official listing will be on February 3rd, with Huatai International, Morgan Stanley, and UBS as joint sponsors. H Share Offer Price at a 12% Discount Compared to A Shares The stock is already listed in mainland China, with Eastroc Beverage A shares (605499) closing at RMB 253.36 last Friday, equivalent to approximately HKD 283.21, indicating that the H share offer price is at least a 12.4% discount compared to A shares. It is worth noting that the stock has introduced cornerstone investors including Al-Rayyan, Temasek's wholly-owned subsidiary Taibai, True Light, BlackRock, UBS AM Singapore, Tencent (700), HSG Growth, JPMAMAPL, Azure Skylines Limited, Taikang Life, Pacific Century Pines Investments 1 Limited, FMR participating funds, Velmar Company Limited, Pinpoint, Amazing Mountain, and Great China Motivation Fund Phase II L.P., with a subscription amount of HKD 4.99 billion. The prospectus states that Eastroc Beverage's revenue growth rate ranks first among the top 20 listed soft drink companies globally. According to a Frost & Sullivan report, in terms of sales volume, it has ranked first in the Chinese functional beverage market for four consecutive years since 2021, with market share increasing from 15% in 2021 to 26.3% in 2024; in terms of retail sales, it is projected to be the second-largest functional beverage company in 2024, with a market share of 23%. Coverage of Over 4.3 Million Terminal Sales Points The prospectus also indicates that the group has established a comprehensive sales network covering the entire country. As of September 30 last year, it covered over 4.3 million terminal sales points nationwide, achieving nearly 100% coverage of prefecture-level cities in China. In terms of brand and products, "Eastroc Special Drink" has become a billion-level product in China by retail sales. In 2024, energy drinks are expected to generate revenue exceeding RMB 13.3 billion, with a compound annual growth rate of 27.3% from 2022 to 2024. In the sports drink sector, the "Eastroc Hydration" product launched in January 2023 has rapidly risen, recording nearly RMB 1.5 billion in revenue in its second year, with an annual growth rate of 280.4%. Currently, the product matrix covers multiple categories, including energy drinks, sports drinks, tea beverages, coffee beverages, plant protein beverages, and fruit and vegetable juice beverages In terms of performance, EASTROC BEVERAGE recorded revenue of RMB 16.838 billion in the first nine months of last year, an increase of 34% year-on-year; during the period, profit was RMB 3.76 billion, an increase of 39% year-on-year. As for the use of the funds raised this time, approximately 36% will be used to improve production capacity layout and promote supply chain upgrades; about 15% will be used to strengthen brand building and consumer interaction, continuously enhancing brand influence; approximately 11% will be used to continue advancing the national strategy, expanding, deepening, and refining the operational channel network; about 12% will be used to expand overseas market business, exploring potential investment and acquisition opportunities; approximately 10% will be used to strengthen digital construction in various business segments; about 6% will be used to enhance product development capabilities, continuously achieving product category expansion; and approximately 10% will be used for working capital and general corporate purposes