Dongpeng Beverage: After the energy drink, where is the 'next billion-dollar secret'?

In the article "Dongpeng: Tearing Red Bull, Kicking Monster, How Did Domestic 'Life-Sustaining Water' Become the King of Counterattack?", we focused on analyzing the business model and core competitiveness of $EASTROC BEVERAGE(605499.SH). So, from the current standpoint, is Dongpeng still a good investment target? Is it facing deteriorating competition in the local market like Monster? How much room is there for Dongpeng to become a platform-based soft drink company, represented by its electrolyte drink Buweila? We continue the discussion in this article:

Detailed Content Below:

I. What is the Competitive Landscape of Energy Drinks?

1. Red Bull is Entangled in Trademark Disputes, Unresolved

Before discussing Dongpeng's growth potential, let's first analyze the competitive landscape of domestic energy drinks. From the market share chart below, it is evident that Dongpeng's market share is still rapidly growing, eating into the shares of Red Bull and other players.

We categorize Dongpeng's competitors into two types: one is the Red Bull series, which still leads Dongpeng in terms of sales revenue (in terms of sales volume, Dongpeng is already the leader), and the other is the chasing series represented by Lehu and Tizhi Energy. We will analyze them in order:

Red Bull Series in Disarray, Two Strong Rivals, Dongpeng Benefits: Here, we need to add a small background. The Red Bull currently sold in China is mainly operated by China Red Bull, a joint venture established in 1996 by Thailand's T.C. Pharmaceutical Industries and Huabin Group. T.C. Pharmaceutical Industries, as the creator and brand owner of Red Bull, authorized Huabin Group to be responsible for specific production and operation in China, with a joint venture contract term of 20 years. However, before this, the two parties also signed a 50-year agency contract in 1995, laying the groundwork for future conflicts.

In 2016, T.C. Pharmaceutical Industries did not renew the Red Bull trademark license contract and requested Huabin Group to stop using the China Red Bull trademark. They also filed lawsuits in multiple locations against Huabin Group and its distributors, demanding a halt to the sale of Red Bull beverages. The core of the dispute is whether Huabin Group and related parties still have the agency rights for Red Bull, essentially arguing which agreement is the most effective document for Huabin Group's agency of Red Bull in China.

However, from the start of the trademark dispute to the current situation nearly ten years later, after back-and-forth "tug-of-war" between the two parties, there is still no final conclusion. But it is clear that: 1) Huabin Red Bull has been completely removed from mainstream e-commerce platforms like JD.com and Tmall; 2) Huabin Group is not allowed to conduct related advertising. Affected by this, Huabin Red Bull's sales revenue fell from 22.3 billion yuan to 21 billion yuan over the five years from 2019 to 2024, but overall, the decline is not significant.

On the other hand, to seize Huabin Red Bull's market share in China, T.C. Pharmaceutical Industries personally launched two products in China in 2019: Red Bull Anaji (later renamed Red Bull Taurine Drink) and Red Bull Vitamin Flavored Drink. Currently, the sales revenue of T.C. Pharmaceutical Industries' Red Bull (Taurine + Flavored Drink) in China is roughly between 5-6 billion yuan in 2024 (each accounting for half), and it is in the growth stage.

In other words, there are currently three types of Red Bull on the market, belonging to the two camps of Huabin and T.C. Pharmaceutical Industries. To deeply analyze the impact of the Red Bull series on Dongpeng, let's briefly introduce the origins of the three types of Red Bull:

Based on the information in the table above, it can be seen that T.C. Pharmaceutical Industries' strategy is to limit Huabin's advertising and channel listing as much as possible through legal means, while launching a similar product matrix to seize Huabin Red Bull's market share. Among them, the taurine drink, as a health food with "Blue Hat" certification (only health foods with Blue Hat certification can highlight functionality in promotions), assumes the role of compliant functional attributes and professional endorsement, positioning itself as a replacement for Huabin Red Bull's functional mindset;

While the flavored drink uses a low taurine + low caffeine combination as an entry-level energy drink product, attempting to reach more people through rapid iteration of packaging and taste (the formula adjustment cycle for Blue Hat certified health food products is long, and changes are difficult, making it unsuitable for rapid product iteration). For the weak links in the channel, T.C. Pharmaceutical Industries cooperates with Yangyuan in the north and Budweiser in the south, trying to make up for its shortcomings through the channel networks of these two fast-moving consumer goods giants.

From the results, combined with research information, although the taurine drink quickly achieved volume through the distributor networks of the two fast-moving consumer goods giants, due to different channel strategies and being promoted by different teams, the taurine drink's price in the north and south regions is not unified, and there is a serious phenomenon of cross-regional sales.

While the flavored drink relies on T.C. Pharmaceutical Industries' own team for deep channel cultivation, it is mainly concentrated in modern supermarkets and special channels (gas stations, gyms, entertainment venues, etc.), and is relatively weak compared to Dongpeng in traditional mom-and-pop stores and lower-tier channels.

For Huabin Red Bull, the most obvious two problems brought by T.C. Pharmaceutical Industries' entry into China are:

1) Consumer Perception Disorder: Due to the impact of lawsuits, Huabin Group significantly reduced its advertising investment. Meanwhile, the coexistence of multiple Red Bull products on the market also increased the difficulty for consumers to identify them, leading to a decline in trust in the Red Bull brand. Dongpeng seized this opportunity to increase its advertising investment and capture consumer mindshare.

2) Distributors' Complaints: On one hand, T.C. Pharmaceutical Industries continuously sued Huabin Red Bull's distributors. On the other hand, due to the risk of product delisting and inventory backlog leading to poor payment collection, many Huabin Red Bull distributors turned to Dongpeng and other competitors.

Through the above analysis, it is clear from the perspective of the competitive landscape that, whether from the channel or consumer mindshare perspective, Red Bull's continuous internal strife in recent years has provided Dongpeng with an excellent window of opportunity. This is also an important "external factor" for the rapid increase in market share, in addition to Dongpeng's own competitiveness analyzed in "Dongpeng: Tearing Red Bull, Kicking Monster, How Did Domestic 'Life-Sustaining Water' Become the King of Counterattack?".

So, from the current standpoint, what impact will the final progress of the lawsuit have on Dongpeng? Dolphin Research attempts to make a simple projection of possible future scenarios here:

Scenario One: T.C. Pharmaceutical Industries Wins, Recovers Agency Rights and Operates Independently. If T.C. Pharmaceutical Industries wins, Huabin completely loses agency rights. In the short term, Huabin Red Bull will be delisted on a large scale nationwide, allowing Dongpeng to further eat into Huabin Red Bull's share, which is beyond doubt.

However, in the medium to long term, on one hand, T.C. Pharmaceutical Industries recently launched the first PET bottled Red Bull (400ml, retail price 7 yuan), with a clear intention to directly compete with Dongpeng in the bottled track. In addition, T.C. Pharmaceutical Industries has integrated the taurine and flavored drink teams for unified operation. Dolphin Research believes it will be a strong competitor for Dongpeng.

Source: T.C. Pharmaceutical Industries Red Bull Official Website

Scenario Two: Huabin Group Wins, Increases Market Investment to Recover Share. If Huabin Group wins, increasing advertising and market investment means Dongpeng's "volume bonus" will be weakened. On the other hand, to regain the market share lost in recent years, Dolphin Research speculates that Huabin will likely follow T.C. Pharmaceutical Industries' example and launch a PET bottled Red Bull (previously restricted by lawsuits, unable to launch new products), and will suppress Dongpeng's profit margin through price wars, and Dongpeng, to maintain market share, will naturally join the price war. This also means that the final result will be the accelerated exit of small and medium brands, and further concentration.

Scenario Three: Unresolved, Continued Entanglement, i.e., Continuing the Current Situation, with Lawsuits in Different Places, Winning in Some Places, Losing in Others.

This is also the scenario that Dolphin Research believes is most likely and is the most favorable situation for Dongpeng. As long as the Red Bull lawsuit remains unresolved, based on the risk of agency rights ownership, both Huabin and T.C. Pharmaceutical Industries will find it difficult to fully invest in advertising and channel construction, avoiding "making wedding clothes for others" in the end. This also means that there is little risk of price wars, and the longer the lawsuit drags on, the more solidified Dongpeng's channel and mindshare advantages will become.

Through the above analysis, it can be seen that the unresolved situation is the best result for Dongpeng, as it can avoid direct competition with Red Bull. Once the dust settles, whether T.C. Pharmaceutical Industries or Huabin wins the final Red Bull agency rights, it is certain that the winner will have more strength in resource allocation, channel expansion, and brand reshaping for Red Bull, which will put some pressure on Dongpeng's market share.

2. Chasers Mainly Defensive, Difficult to Form a Climate:

After discussing Dongpeng's strongest competitor, Red Bull, let's look at whether other chasers might impact Dongpeng's market share: For chasers, the three core players are Lehu from Dali Group, Tizhi Energy from Zhongwo Foods, and War Horse from Huabin.

First, let's look at War Horse under Huabin Group. From the intention of launching this product in 2017, besides competing with Dongpeng, Lehu, and other competitors, it is more important to position itself as a substitute if Huabin Red Bull is comprehensively delisted and banned from sale. From the actual results, on one hand, War Horse's taste is quite different from Red Bull, and consumer acceptance is not high. Additionally, with the subsequent tug-of-war between Huabin and T.C. Pharmaceutical Industries, Huabin significantly reduced its investment in War Horse, leading to a continuous decline in War Horse's market share. Therefore, as long as the lawsuit has not reached a final conclusion, War Horse is unlikely to pose a substantial threat to Dongpeng.

As for Lehu and Tizhi Energy, from the table above, it can be seen that these two companies follow a similar cost-effective strategy as Dongpeng, focusing on lower-tier markets. In terms of product composition and taste, they are not much different from Dongpeng, with a high degree of homogeneity.

In the absence of significant product differentiation, the competition is essentially about the company's operational efficiency and channel control, which is Dongpeng's forte. Since Lehu and Tizhi Energy have not undergone digital transformation and still use traditional large circulation channel models, although their distribution rates are high in their respective strong regions, the overall channel management's refinement level is far inferior to Dongpeng.

However, considering that both are veteran players in the energy drink market and have established first-mover advantages in channel and consumer mindshare in their respective home markets, their positions are relatively stable. Therefore, Dolphin Research speculates that Lehu and Tizhi Energy will focus more on defending their "one-acre three-point land" in the future, making it difficult to compete with Dongpeng for national market share.

Overall, Dolphin Research believes that it is basically impossible for chasers to defeat Dongpeng on the traditional energy drink track through a cost-effective route. To eat into Dongpeng's market share, there must be a major change in consumer trends, and for energy drinks, learning from the evolution path of American energy drinks, it is sugar-free and functionalization.

However, unlike Monster, on one hand, Dongpeng has made early arrangements for the health trend, launching a sugar-free version of Dongpeng Special Drink in July this year, as an upgrade of the 2021 zero-sugar special drink, adding L-α-glycerophosphocholine, which helps relieve brain fatigue, targeting white-collar mental workers (Red Bull series, Lehu, and Tizhi Energy are still mainly sugar-containing versions). Although the current main consumers of domestic energy drinks are still mainly blue-collar workers, under the general trend of "sugar control" and "sugar reduction" and health, it can preemptively capture consumers' mindshare of "healthy energy drinks."

On the other hand, compared to the lack of absolute channel barriers in the United States, emerging brands can easily impact the market share of Red Bull and Monster through product and marketing competition, leveraging the channels of giants. In contrast, in China, although new brands may enter the energy drink track through product and marketing innovation in the future, due to the fragmented and difficult-to-control domestic channels, it is also difficult to bring serious impact to Dongpeng in the short term, leaving Dongpeng enough time to respond.

In summary, the current competitive landscape of Dongpeng in the energy drink track has not deteriorated like Monster, the leading position remains stable, and it is still eating into the market share of other players. However, a small probability event to be wary of is that once the Red Bull trademark dispute is resolved in the future, focusing resources on the PET track to compete directly with Dongpeng, a price war may cause some impact on Dongpeng's market share at that time.

II. Category Expansion is Key

1. Channel Expansion Bonus Nearing End

Based on the analysis of the competitive landscape in the previous article, from the current standpoint, how is Dongpeng's growth potential? First, we need to solve the most critical issue, which is how much space is left for Dongpeng's cornerstone business—energy drinks nationwide?

Dolphin Research provides two ideas for reference here

1) From the Perspective of Industry Penetration Rate: According to Euromonitor data, Dongpeng's energy drink sales revenue in 2024 is 13.3 billion yuan, with a market share of 31%, corresponding to a market size of approximately 42.6 billion yuan for China's energy drinks (factory-end caliber). Assuming a 10% annual compound growth rate at the industry level in the next five years, the market size in 2029 would be 68.6 billion yuan.

Based on the analysis of the competitive landscape above, in the case of the unresolved Red Bull series lawsuit, Dolphin Research assumes that Dongpeng continues to seize market share nationwide, with a market share increasing from the current 31.2% to 40%, corresponding to 27.4 billion yuan, with a compound growth rate of XX%.

However, it should be noted that this estimation method actually implies that Dongpeng's subsequent nationwide expansion process can basically achieve similar development difficulty and single-point output in each region, but in reality, considering that Dongpeng currently covers 4.2 million terminal outlets nationwide, it is close to saturation.

Moreover, from the chart below, it can also be seen that since 2023, Dongpeng's terminal outlet expansion speed has significantly slowed down, corresponding to an increase in single-point output, which also means that the difficulty of obtaining high-quality new points in the future is obviously higher, and the increment comes more from the improvement of single-point output brought by frozen display and deep cultivation, so the estimation result is relatively optimistic.

2) From the Perspective of Mature Market Benchmarking: Guangdong, as Dongpeng's most core, mature, and densely channeled base, combined with research information, currently has about 340,000 outlets in the province, with a penetration rate of over 96%, in a highly mature period.

From the perspective of single outlet output, the average single-point output in Guangdong in 2024 is approximately 11,000 yuan/year, more than three times the national average single-point output (the national average single-point revenue is 3,200 yuan/year).

Considering that Guangdong Province's brand awareness, economic development level, and refined channel cultivation are far higher than the national average level, we assume that the company will achieve 40%-45% of Guangdong Province's single-point output through frozen display and continuous digital deep cultivation, corresponding to 4,300-5,000 yuan/year, according to the final 5 million terminal outlets (benchmarking Master Kong), corresponding to 22-24.8 billion yuan, with a 65%-85% improvement space compared to the current level.

Combining <1) - 2)>, Dolphin Research believes that without considering Red Bull launching a price war, leading to a deterioration of the competitive landscape, Dongpeng's main business energy drinks entering the 20 billion club is relatively certain, but considering that the audience of energy drinks is relatively niche in the entire soft drink industry, it will be more difficult to continue to break through 30 billion on the basis of 20 billion.

In fact, looking at all single categories of soft drinks, from a retail perspective, there are very few that can break through the 20 billion club. They are either high-frequency necessities (such as Nongfu Spring's packaged water) or super brands with core functions that have completed market education (Red Bull, Coca-Cola). A common rule is that these categories face the problem of slowing growth after breaking through 20 billion due to reaching a penetration rate bottleneck and the influx of substitutes. Dolphin Research believes that this is no exception for Dongpeng Special Drink.

In fact, Dongpeng's continuous high growth of over 30% in recent years since its listing is largely due to the channel bonus brought by nationwide expansion. As the speed of terminal outlet expansion slows down, the difficulty of relying on refined operations to increase single-point output is obviously higher than the expansion of outlets. Therefore, to maintain continuous high growth, Dongpeng has also proposed a response strategy—category expansion! We will continue to analyze this below.

2. From Single Category to Platform Company

In 2024, Dongpeng proposed the comprehensive implementation of the "1+6" multi-category strategy for the first time at the annual summary meeting, reducing dependence on a single core product. That is, with energy drinks as the basic plate, focusing on cultivating and deploying sports drinks (Buweila), tea drinks (Guozhicha, Pengyou Shangcha), ready-to-drink coffee (Dongpeng Daka), pre-mixed wine (VIVI), plant protein drinks (Hainan Coconut), and other high-potential categories, with the goal of gradually cultivating multiple 1 billion-level or even 3 billion-level single products.

For the platform company that expands from a single category to multi-category operations, benchmarking Nongfu Spring, it can be seen that Nongfu initially used packaged water as the basic plate, continuously marketing around water sources, establishing a healthy brand image in consumers' minds, and further expanding into sugar-free tea, NFC juice, and other health-related tracks.

From Dongpeng's current product layout, it can be seen that Dongpeng's idea is to gradually overflow from the energy drink scene to more daily scenes such as sweat replenishment and leisure, with the common characteristic of serving general functional needs, with a broader potential audience.

However, since Dongpeng is a typical heavy asset model, with a self-built full chain, this also means that from the perspective of operational rhythm, the optimal choice is definitely to focus resources on creating large single products one by one, continuously diluting unit manufacturing costs to improve gross profit margin, rather than multi-category parallel operations. From the chart below, it can be seen that the current gross profit margin of Dongpeng's second-largest category, Buweila, is only 30%, 18 percentage points lower than the special drink, and there is still significant room for improvement.

From the current situation, Buweila has rapidly increased from less than 500 million to 1.5 billion by the end of 2024 after nationwide distribution began in mid-2023, and by the first half of 2025, it has basically reached the sales revenue of the entire year of 2024, becoming Dongpeng's first category to reach the 1 billion level besides energy drinks. So, how much space can Buweila contribute to Dongpeng in the future?

First, in terms of industry space, electrolyte drinks have always been a very niche track in China, dominated by foreign brands represented by Pocari Sweat.

However, with the National Health Commission and the CDC emphasizing the importance of electrolyte supplementation during the pandemic, after nationwide science popularization, electrolyte drinks have experienced explosive growth since 2022.

According to statistics from Qianzhan Research Institute, the market size of electrolyte drinks has rapidly grown from less than 2 billion yuan in 2021 to 11 billion yuan by the end of 2024, with a CAGR of 82% (retail caliber). It has performed extremely well among various soft drink categories, which is also the key reason why Dongpeng has focused resources on fully promoting Buweila since 2023.

In the medium to long term, Dolphin Research believes that considering the different consumption preferences of consumers in different countries, directly benchmarking the absolute value of per capita consumption lacks rigor, but the relative relationship between different categories can be used as a reference.

According to Nielsen, from the chart below, it can be seen that the market size of electrolyte drinks in the US market is 60% of that of energy drinks, while the current scale of domestic electrolyte drinks is less than 50% of energy drinks. Therefore, Dolphin Research believes that with the spread of health and electrolyte drink consumption scenarios, the growth rate of electrolyte drinks will still be higher than that of energy drinks in the future, maintaining double-digit growth.

In addition, from the perspective of the competitive landscape, from the chart below, it can be seen that the most obvious change in the competitive landscape between 2022 and 2024 is that Dongpeng has emerged since the launch of Buweila in 2023, surpassing Pocari Sweat in two years to become the second in the industry after Alien.

In fact, Buweila's approach is the same as that of the special drink: continuing the extreme cost-effectiveness in products, compared to the industry-wide pricing of 500-600ml and 5-6 yuan, Buweila mainly promotes 1L/6 yuan large packaging nationwide, with unit pricing half that of mainstream players, and continues to use terminal promotions such as "1 yuan enjoyment, scan code to receive red envelopes".

Quickly access Dongpeng Special Drink's channels in channels to achieve channel reuse, combined with the operational efficiency brought by "five codes in one", Buweila has rapidly increased in volume nationwide, surpassing competitors.

From the current standpoint, although Alien is still dominant, occupying nearly half of the industry's share, it is more due to the first-mover advantage in cognition of "0 sugar 0 calories" proposed by Yuanqi Forest in the industry, and the accelerated launch of new products with different specifications, different segmented functions, and different flavors in the past two years. According to research information, Alien has 41 SKUs in electrolyte water, ranking first in the industry, and is leading in product strength.

However, from the perspective of channels, whether Alien or Pocari Sweat, the number of terminal outlets covered nationwide is close to 1 million, focusing on high-line markets such as first- and second-tier cities, making it difficult to sink channels in the short term, while Buweila has currently laid nearly 3 million terminal outlets with the help of special drink outlets, and is still rapidly expanding. From this perspective, Dolphin Research believes that Buweila's growth potential is greater than that of competitors.

Based on the above analysis, following the idea of special drinks, in 2024, according to the factory-end caliber, the market size of the entire electrolyte drink industry is approximately 11 billion yuan. Assuming that the electrolyte water track will have an annual compound growth rate of 18% (higher than energy drinks) in the next five years, reaching 25 billion yuan by 2029, Buweila's market share will increase from 14% to 30%-35%, corresponding to 7.5-8.8 billion yuan.

As for other beverages, since they are still in the pilot stage and have not been nationwide, with a small scale, we will not discuss them too much here. However, following a similar idea of "large packaging + extreme cost-effectiveness + channel reuse" as Buweila, Dolphin Research believes that Dongpeng also has the ability to gain a share in other categories.

III. How to View Dongpeng's Investment Value at Present?

1. Energy Drinks Slow Down, Second Curve Takes Over

First, in terms of profit forecast, for Dongpeng's main category of energy drinks, combined with the analysis above, since Dongpeng's channel rapid expansion bonus is nearing its end, future growth mainly relies on frozen display to increase single-point output. Dolphin Research assumes that the growth rate of energy drinks will slow down in the next five years, growing from 13.3 billion yuan in 2024 to 26 billion yuan in 2029, with a CAGR of 14.5%.

Since electrolyte drinks are still in the stage of rapid nationwide channel expansion, with a low base, and the category's growth bonus is higher than that of energy drinks, Dolphin Research has made a high-growth assumption for Buweila in the next five years, growing from 1.4 billion yuan to 6.6 billion yuan, corresponding to a CAGR of 35%. As for other beverages, Dolphin Research assumes that Dongpeng will cultivate another 3 billion-level category in five years, growing from 1 billion yuan to 4 billion yuan, corresponding to a CAGR of 32%.

Based on the above assumptions, Dongpeng's total revenue will grow from 15.8 billion yuan in 2024 to 36.9 billion yuan in 2029, corresponding to a CAGR of 18%.

In terms of gross profit margin, although the gross profit margin of electrolyte drinks and other beverages is lower than that of energy drinks, and the proportion of the two in Dongpeng's total revenue is continuously increasing, Dolphin Research assumes that with capacity ramp-up, supply chain efficiency improvement, and scale effects driving the gradual increase in gross profit margin of each category, the company's overall gross profit margin will slightly increase from 44.8% to 45.7%.

In terms of operating expenses, with the release of operating leverage, Dolphin Research assumes that Dongpeng's operating expense ratio will gradually decrease, and finally, net profit will grow from 3.1 billion yuan to 8.9 billion yuan, corresponding to a CAGR of 23%.

2. Valuation and Growth Binding, Short-term May Face Valuation Correction

Reviewing Dongpeng's valuation changes over the past three years, it can be seen that except for the beginning of 2023 when investor sentiment was extremely high, Dongpeng's valuation was pushed above 50x, at other times it was between 35x-45x, with an average PE of 40x, consistent with Dongpeng's 40% profit CAGR over the past three years. Therefore, unlike Monster, Dongpeng's high valuation is entirely driven by high growth in performance, and the market has not given Dongpeng too much growth valuation premium.

Therefore, under the premise that Dongpeng's competitive landscape has not deteriorated, considering that energy drinks face a ceiling limit, and the "second curve" is still in the capacity ramp-up stage, with scale effects not fully released and profitability not as good as energy drinks, it is likely to face valuation correction due to slowing performance growth in the future.

From a relative valuation perspective, considering that Dongpeng's performance growth is likely to slow down in the future, if calculated at 30x PE in 2026 (corresponding to a 20% CAGR from 2025-2029), the corresponding market value is 160 billion yuan, with basically no space.

From an absolute valuation perspective, we calculate WACC at 10.2%, and finally calculate Dongpeng's reasonable market value at 163.8 billion yuan under the assumption of a 3% perpetual growth rate, with only a 1% premium space compared to the current level.

The results obtained by the two calculation methods are basically consistent, that is, in the case where Dongpeng's main category of energy drinks faces growth bottlenecks and the second curve cannot fully undertake the growth of the main category, Dongpeng will face the risk of valuation correction due to slowing growth in the short term.

In addition, Dolphin Research, out of caution, did not consider the incremental impact of Dongpeng's overseas expansion on performance in the calculation process. In fact, Dongpeng established an overseas business unit in 2023 and took Southeast Asia as the primary destination for overseas expansion, initially relying on local Chinese channel resources for distribution. However, as an imported product, Dongpeng's brand awareness is low, and its performance was not good without refined brand cultivation.

But recently, Dongpeng has changed its overseas approach, on one hand, establishing a sales team in Southeast Asia to enter convenience stores and local special channels, and on the other hand, starting to cooperate with large local distributors to expand sales coverage, and gradually strengthening digital construction in overseas regions for refined operations, Dolphin Research believes that if considering the improvement of Dongpeng's overseas regions through refined operations and channel construction in the next 3-5 years, the actual premium space for Dongpeng is obviously higher than the current calculation results.

Summary:

Overall, Dongpeng, as the first company in the industry to deeply undergo digital transformation, through ten years of experience accumulation and exploration, currently, with the support of "five codes in one", the company's operational efficiency is unique among soft drink companies, and it is an excellent company.

But the biggest problem is that after the rapid nationwide expansion in the early stage, the main business energy drinks face a ceiling limit, and future growth is likely to slow down. Facing growth bottlenecks, Dongpeng hopes for the "1+6" multi-category strategy.

Currently, the second growth curve represented by the electrolyte drink "Buweila" has taken shape, showing strong growth potential. Looking ahead, whether it can successfully replicate the "large packaging + extreme cost-effectiveness + channel reuse" approach and gradually cultivate multiple 3 billion-level single products is the key to transforming into a platform company.

As for the overseas business, although the imagination space is relatively large, since overseas channel cultivation and brand building start from scratch, they all require time. According to management's communication, Dongpeng positions overseas expansion as a 5-10 year goal, so in the medium term, it still depends on Dongpeng's category expansion results. From an investment rhythm perspective, if Dongpeng experiences valuation correction due to slowing growth in the future, falling to around 25x, since Dolphin Research believes that Dongpeng is still an extremely high-quality company in the medium to long term, it can be actively followed at that time. Before that, Dolphin Research believes that the risk of valuation correction should still be guarded against.

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