Dongpeng Beverage's steady performance growth cannot prevent Hong Kong stocks from falling below their offering price

(Source: Economic Information Daily)

Dongpeng Beverage (Group) Co., Ltd. (referred to as “Dongpeng Beverage,” 605499.SH; 09980.HK) listed on the Hong Kong Stock Exchange and achieved “A+H” listings in both Mainland China and Hong Kong. For more than a month since its listing, its performance in the Hong Kong market has been weak, with its share price mostly trading below the issue price. By the close on March 24, Dongpeng Beverage’s H-share closing price was HKD 228.80 per share, down 7.74% from the issue price of HKD 248.00 per share. What is worth noting is that an earlier profit forecast increase announcement by Dongpeng Beverage stated that in 2025, both the company’s revenue and the net profit attributable to shareholders of the parent company would grow rapidly. However, these eye-catching results have not supported a “first-day win” in its Hong Kong stocks, and its A-share price has also continued to decline recently.

Steady growth in revenue and net profit, but the capital market response is lukewarm

In 2025, Dongpeng Beverage’s revenue and net profit attributable to shareholders of the parent company both grew strongly, showing a positive development trend of “a stable base and a new growth engine being unleashed.”

The profit forecast increase announcement shows that in 2025, Dongpeng Beverage’s full-year operating revenue is expected to reach RMB 20.76 billion to RMB 21.12 billion, up 31.07% to 33.34% year on year; net profit attributable to shareholders of the parent is expected to be RMB 4.34 billion to RMB 4.59 billion, up 30.46% to 37.97%. Dongpeng Beverage said that the profit forecast increase in 2025 was mainly driven by its principal business: the company’s channel operation capability and its two major pillar products injected momentum into performance growth.

Public information shows that Dongpeng Beverage’s principal business is the research, development, production, and sales of beverages. Its main product categories include energy drinks, electrolyte drinks, tea-based (category) beverages, coffee-based (category) beverages, plant protein beverages, and fruit and vegetable juice (category) beverages, among others. According to a report by Frost & Sullivan, in China’s functional beverage market, by sales volume, Dongpeng Beverage has ranked first for 4 consecutive years since 2021; by retail value, Dongpeng Beverage is the second-largest functional beverage company in 2024, with a market share of 23.0%.

From the perspective of revenue structure, energy drinks—the core engine of Dongpeng Beverage—have maintained steady growth. In the first three quarters of 2021, 2022, 2023, 2024, and 2025, the company’s energy drink revenue growth rates were 42.34%, 23.98%, 26.48%, 28.49%, and 19.36%, respectively. In the first three quarters of 2025, its energy drink series achieved revenue of RMB 12.563 billion, with revenue accounting for 74.63%.

Dongpeng Beverage’s second growth curve, electrolyte drinks, has also performed well. In the first three quarters of 2025, the electrolyte drink segment generated revenue of RMB 2.847 billion, a year-on-year increase of 134.78%, far outpacing the energy drink segment; the revenue share increased from 9.66% in the same period of the previous year to 16.91%.

Other beverage businesses mainly include new products such as low-sugar tea drinks, “Dongpeng Daka” coffee, and “Haidao Coconut” coconut milk. Most of these products are still in the market incubation stage. In the first three quarters of 2025, Dongpeng Beverage’s other beverage business achieved revenue of RMB 1.424 billion, up 76.41% year on year, with a revenue share of only 8.46%.

Industry insiders point out that although Dongpeng Beverage’s multi-category layout has begun to show results, categories such as coffee and plant-based beverages are still in highly competitive “red ocean” markets. For coffee, Dongpeng Beverage’s competitors for “Dongpeng Daka” include not only channel giants represented by Nestlé, but also brick-and-mortar brands at the “thousand-store” level such as Luckin Coffee, CUDDY, and Starbucks. Plant-based beverage categories are also facing “squeezing” from cross-category competitors, including traditional giants such as Wahaha and Nongfu Spring, as well as new consumption brands such as Genki Forest.

On March 10, when Dongpeng Beverage answered investors’ questions on an interactive platform, it stated that the company adheres to the “1+6” multi-category strategy, with “Dongpeng Special Drink” as the fundamental business. The company will continuously maintain steady growth and industry-leading advantages; new products such as “Dongpeng Replenish It” quickly scaled up, injecting new momentum into the company’s growth, and the two form a healthy synergy.

However, contrasting with the impressive performance figures is the pressure on Dongpeng Beverage’s share price after its Hong Kong listing. Data shows that on February 3, when it listed in Hong Kong, the issue price of Dongpeng Beverage was HKD 248.00 per share, and the total fund raised was HKD 10.141 billion. However, after a brief surge, the share price overall showed a downward trend. Less than two months after its Hong Kong listing, the lowest trading price of Dongpeng Beverage reached as low as HKD 203.00 per share at one point, down more than 15% from the issue price.

At the same time, Dongpeng Beverage’s A-share market performance is also unimpressive. On February 3, its A-share closed at RMB 253.96 per share, down 1.18% on the day; by March 24, it closed at RMB 224.50 per share, down 11.60% from the closing price on February 3.

Going to Hong Kong to broaden financing channels and accelerate the layout of markets at home and abroad

The prospectus shows that the main purpose of Dongpeng Beverage’s listing in Hong Kong is to raise funds to support capacity expansion, brand building, nationwide strategy implementation, overseas expansion, and digital upgrades, while also optimizing working capital and enhancing product development capabilities. Among these, advancing the nationwide strategy and expanding overseas is an important direction for the company’s Hong Kong financing.

According to the operating data announcement for the first three quarters of 2025, Dongpeng Beverage’s revenue in the Guangdong region, East China region, Central China region, Guangxi region, Southwest region, and North China region were RMB 3.885 billion, RMB 2.395 billion, RMB 2.208 billion, RMB 1.142 billion, RMB 2.027 billion, and RMB 2.601 billion, respectively, representing year-on-year growth of 13.50%, 32.76%, 28.15%, 21.99%, 48.91%, and 72.88%, respectively. Notably, the North China region has surpassed the East China region to become Dongpeng Beverage’s second-largest source of revenue.

Some analysts point out that after fully tapping the domestic market, Dongpeng Beverage may face bottlenecks in nationwide development. In the first three quarters of 2025, Dongpeng Beverage’s “headquarters” Guangdong region revenue grew 13.50% year on year, but the third quarter alone saw growth of only 2.07% year on year in Guangdong. Judging from operating data, in the first three quarters of 2025, except for increases in the number of distributors in the Southwest and North China regions, the number of distributors in other regions declined.

To strengthen coverage of terminal consumers, Dongpeng Beverage plans to intensify implementation of the “freezing/in-freezer strategy,” and part of the funds raised in this offering will also be used to increase the scale and intensity of installing and using freezers at terminal sales outlets. The Hong Kong IPO prospectus shows that over the next 3 to 5 years, the company expects to purchase and deploy 600,000 freezers in provincial-level cities nationwide.

In terms of overseas market expansion, Dongpeng Beverage is also exploring potential investment and acquisition opportunities. As disclosed in the Hong Kong IPO prospectus, the company plans to use funds to build supply chain infrastructure, including warehousing, in key overseas markets, with the aim of achieving localized operations. In the short term, the company will focus on the Southeast Asia market; in the medium to long term, it will gradually expand efforts into other markets such as the United States.

Industry insiders point out that, compared with the domestic market—where brand awareness is high and the distribution system is well established—the current overseas functional beverage consumption market is still dominated by Red Bull. Whether Dongpeng Beverage can successfully complete localized transformation in Southeast Asia and other overseas markets will still face many challenges and uncertainties.

“High deposits and loans” is questioned; attention on shareholder reductions

Financial reports show that Dongpeng Beverage has a financial structure phenomenon of “high deposits and high loans,” meaning it holds large amounts of cash while still taking on debt. Industry insiders analyze that such a “high deposits and high loans” or “large deposits and large loans” allocation of funds is uncommon in the food and beverage industry. The reporter noted that this phenomenon has also sparked questions in the capital market about the purpose of Dongpeng Beverage’s financing for its Hong Kong listing.

Based on disclosed data, Dongpeng Beverage’s scale of deposits and loans has remained at a relatively high level. The 2025 third-quarter report shows that as of September 30, 2025, Dongpeng Beverage’s monetary funds were RMB 5.720 billion. Meanwhile, its short-term borrowings reached RMB 6.973 billion, increasing by RMB 643 million from RMB 6.551 billion at the end of 2024.

What is worth noting is that while it has a “high deposits and high loans” position, Dongpeng Beverage is actively implementing large cash dividends, while its major shareholders are densely reducing holdings and cashing out, drawing widespread investor criticism.

According to public information, Dongpeng Beverage’s equity is mainly held by founder Lin Muqin and his family. As disclosed in the 2025 semi-annual report, as of June 30, 2025, the first-largest shareholder Lin Muqin’s shareholding ratio was 49.74%; his brother Lin Mugang and his nephew Lin Daixin’s shareholding ratios were both 5.22%, and the combined shareholding ratio of these three people alone has exceeded 60%.

The Hong Kong IPO prospectus shows that from 2022 to October 9, 2025, when Dongpeng Beverage submitted its filing documents for the Hong Kong listing, it has cumulatively announced distributions totaling RMB 5.4 billion, with a cumulative dividend payout ratio of about 60%. Among these, dividends for 2024 were RMB 2.3 billion, with a payout ratio close to 70%. From the equity structure, Lin Muqin and his family—Dongpeng Beverage’s actual controllers—are clearly the major beneficiaries.

What the market criticizes the most is that, according to the data, since the lock-up shares were released from restrictions in May 2022, Dongpeng Beverage has issued 7 share reduction announcements in total. The former second-largest shareholder, Tianjin Junzheng Venture Capital Partnership (Limited Partnership), after multiple rounds of share reductions, saw its shareholding ratio drop from 9.00% at the time of listing to 1.00% at the end of the first half of 2025. According to incomplete statistics, as of now, including the employee shareholding platform of Dongpeng Beverage and the actual controller-related parties such as Yantai Kunpeng Investment Development Partnership (Limited Partnership), the total share-reduction amount by relevant shareholders has exceeded RMB 7 billion.

Industry insiders point out that, as a beverage leader listed on both the “A+H” markets, Dongpeng Beverage is facing market scrutiny of the company’s capital utilization efficiency and its future development strategy. Whether the company can truly convert capital operations into a long-term driving engine for development and achieve high-quality, steady growth remains to be tested by the market.

(Intern Sun Kaihe also contributed to this article)

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