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Apart from packaged drinking water, it is also one of the leading players in tea, functional beverages and juice segments.
Earnings growth has been relatively steady and the business remains highly cash generative. There is a lot to like in the business.
Although, it has paid out generous dividends in 2019 and plans to payout more before listing. Thus, the need for listing is questionable, even more so if they try to pass it off as a primary issuance after paying out over US$2bn as dividends. Furthermore, the utilisation rates for its production facilities remain sub-par which calls into question the need to build further capacity.
In this note, I’ll talk about the fundamental aspects of the deal.
Nongfu Spring Pre-IPO
Nongfu Spring is looking to raise up to US$1bn in its Hong Kong listing. The company is the market leader in packaged drinking water in China.Apart from packaged drinking water, it is also one of the leading players in tea, functional beverages and juice segments.
Earnings growth has been relatively steady and the business remains highly cash generative. There is a lot to like in the business.
Although, it has paid out generous dividends in 2019 and plans to payout more before listing. Thus, the need for listing is questionable, even more so if they try to pass it off as a primary issuance after paying out over US$2bn as dividends. Furthermore, the utilisation rates for its production facilities remain sub-par which calls into question the need to build further capacity.
In this note, I’ll talk about the fundamental aspects of the deal.
Underlying
Nongfu Spring Co Ltd
Provider
Aequitas Research
Aequitas Research is a leading ECM research firm with a focus on IPOs and placements/follow-on offerings across the Asia Pacific with deal size of over USD100m.
Since 2015, we have covered 400+ IPOs and 450+ placements with a hit rate of 73% and 65%, respectively. We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic analysis.
Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis. We also provide a more quant driven analysis on placement/follow-on offerings.
Markets that we cover include:
Hong Kong,
China ADRs,
India,
Japan,
Australia, and
ASEAN.
Hong Kong,
China ADRs,
India,
Japan,
Australia, and
ASEAN.
Sumeet Singh
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