\u3000\u3 Bohai Water Industry Co.Ltd(000605) 499 Eastroc Beverage (Group) Co.Ltd(605499) )
Energy drinks: soft drinks, high-quality track, leading micro princes and rise together
After years of cultivation, the market of energy drinks in China is still in a period of high viscosity and addiction. According to Euromonitor, the sales of energy drinks in China reached 51.3 billion yuan in 2021, with CAGR exceeding 10% in recent five years, and the market scale is expected to reach 71.3 billion yuan by 2026. For a long time, China Red Bull has been the absolute leader in China's energy beverage market, but the protracted trademark dispute that began in 2016 has damaged the brand, and the market share has rapidly declined from more than 75% to 52.2% in 2021, which has also created a period of strategic opportunities for the rise of local brands. The high pricing strategy adopted by Red Bull at the beginning of its entry into China and the high price sensitivity of mainstream customers have created a large space for latecomers to break the situation by relying on high cost performance strategy. In recent years, a number of local brands represented by Dongpeng have continued to erode Red Bull's market share, and the strong growth momentum is still continuing.
Eastroc Beverage (Group) Co.Ltd(605499) : strategic sense of smell, breaking the energy drink track with high cost performance
In 2009, Mr. Lin Liqin, who once served as the factory director of Red Bull acting factory, keenly grasped the explosion window of the energy beverage industry. Through the extreme cost performance (the unit price of Dongpeng special drink is only half of that of Red Bull, but the content of active ingredients is basically the same) and innovative product packaging, he directly hit the pain points of mainstream consumers and achieved great success in the energy beverage market in Guangdong. In 2021, Eastroc Beverage (Group) Co.Ltd(605499) revenue reached 6.98 billion yuan, and the net profit attributable to the parent company was 1.19 billion yuan. In recent five years, CAGR exceeded 40%, second only to red bull in China's energy beverage market share. In addition to high growth, Dongpeng has maintained high profitability driven by excellent operating capacity. In recent years, roe has remained above 35%, significantly better than peers.
Continue the excellent product strength and brand publicity, vigorously expand channels and accelerate nationalization in the period of strategic opportunity
At present, red bull's trademark disputes are making waves again. For competitors, the period of strategic opportunity will continue to exist for a long time. After Eastroc Beverage (Group) Co.Ltd(605499) was listed, the determination and ability of national expansion were further strengthened: in terms of products, in addition to continuing to promote large cost-effective products, the company continued to enrich the product matrix, focusing on Dongpeng Jiaxi and 0 sugar special drink series, keeping up with the trend of youth and health. In terms of channels, in addition to vigorously expanding the number of channels, we also improved the management level by introducing excellent sales teams to further stimulate the enthusiasm of channel providers. In terms of marketing, make use of the capital advantages of listed companies to maintain high-intensity brand promotion investment, and constantly carry out brand publicity and innovation to create a younger brand image. In terms of capacity, the company's capacity utilization rate has remained high all year round, and the nearly 1 billion yuan raised in this IPO will be used to support capacity expansion. At present, the company has set up production bases in Guangdong, Guangxi, Chongqing, Anhui and other places to lay a production capacity foundation for national expansion.
Profit and investment forecast
We expect to achieve revenue of 8.92/11.2/13.53 billion yuan from 2022 to 2024, with a year-on-year growth rate of 27.80% / 23.60% / 22.73% respectively; The net profit attributable to the parent company was 1.53/2.01/2.49 billion yuan, with a year-on-year growth rate of 27.89% / 31.84% / 23.70% respectively, and the corresponding EPS was 3.81/5.03/6.22 yuan respectively. The current stock price corresponds to pe38 / 29 / 23x, and the "buy" rating is given for the first time.
Risk tips
The process of nationalization is less than expected, the process of capacity expansion is less than expected, and the market competition is intensified.
