C’estbon water bottler gets nod for US$1 billion Hong Kong IPO, medals for Olympic teams
The bottler of one of China’s bestselling water brands is enjoying double happiness, as its fundraising plan in Hong Kong received the go-ahead, while the table tennis teams it sponsors have dominated the winners’ podium at the Paris Olympics.
China Resources Beverage (CRB), the country’s second-largest water bottler and producer of such brands as Afternoon tea and Fire coffee, has been approved by the listing committee of the Hong Kong stock exchange for an initial public offering (IPO), according to a source who helped arrange the deal. The IPO could raise up to US$1 billion, a source said.
At the same time, the Chinese national table tennis teams – sponsored by China Resources – are sweeping up the gold and silver medals in Paris. Chen Men and Sun Yingsha won the gold and silver medals in the women’s singles last Saturday, a day before Fan Zhendong won gold in the men’s singles. The national team will compete in the men’s team final on Friday night and the women’s team final on Saturday.
The Olympic medals and the IPO approval offer a leg up for the bottler of C’estbon, a French word that means “it’s good”, as it competes against its bigger rival Nongfu Spring. The IPO will also be a much-needed boost to Hong Kong’s tepid IPO market. The city, the top IPO market worldwide seven times between 2009 and 2019, ranked only 13th in the first half of this year, according to data compiled by the London Stock Exchange Group’s Refinitiv unit.
A US$1 billion offer would make CRB Hong Kong’s largest IPO since August 2022, when China Tourism Group Duty Free sold US$2.3 billion of stock.
Nongfu raised US$1.2 billion in 2020, in an IPO that was 1,147 times oversold to retail investors, making it the most sought-after new listing that year.
CRB’s shares may begin trading this quarter or early in the fourth quarter, depending on market conditions, the source said. BofA Securities, BOC International, Citic Securities and UBS are the joint sponsors of the IPO, according to its listing application to the Hong Kong stock exchange.
“After four decades of development, we have grown into the second largest company in the packaged drinking water market in China and the largest company in the purified drinking water market in China by retail sales value in 2023,” CRB said in the filing.
CRB’s revenue from C’estbon rose to 39.5 billion yuan (US$5.5 billion) last year, which made the Shenzhen-based company China’s second-largest producer of packaged drinks.
“The IPO of CRB has attracted significant market attention, primarily due to the recent sharp decline in the stock price of its main competitor Nongfu,” said Kenny Ng Lai-yin, a strategist at Everbright Securities International.
Nongfu’s stock price has dropped 40 per cent since February to HK$28.95 in recent trading, which Ng said “reflects a trend of increased competition among mainland businesses in the consumer market, extending into the bottled water sector.”
“With over 90 per cent of its revenue historically coming from bottled water, CRB faces the risk of business being too reliant or concentrated in this area,” Ng said.
China’s market for drinking water rose at a compound average growth rate of 7.1 per cent from 2018 to 2023 and is expected to expand by 7.9 per cent per year from 2023 to 2028, according to a CIC report. The retail sale volume is expected to reach 314.3 billion yuan by 2028, up from 215 billion yuan in 2023.
“In recent years, many consumers prefer packaged drinking water or diet-version beverages over regular, full-calorie beverages,” CRB said. “As consumers are becoming more conscious of water safety in light of rising concerns over the quality of tap water, the demand for packaged drinking water products is expected to rise continuously.”
Chinese Longhuan Beverage, the predecessor of C’estbon, was founded in Shenzhen in 1984, shortly after the economic reform started in 1978. It launched the brand C’estbon in 1990 for packaged drinking water in China, which represents 95 per cent of its sales. It also sells milk tea, coffee and other drinks.
CRB will be the 18th subsidiary within the sprawling portfolio of the state-owned China Resources Group to go public, and the ninth to list in Hong Kong. The group also has nine companies listed on the A-share market in mainland China.
China Resources, headquartered in Hong Kong, has a wide range of businesses, including consumer goods, energy, urban construction and healthcare. It now indirectly owns 60 per cent of China Resources Beverage.
The C’estbon producer has 12 self-owned factories in operation and 34 cooperative manufacturing partners in China, which produced 18.8 million tons of packaged drinking water and drink products last year.
