Chinese Bottled Water Giant Nongfu Spring Prepares for $1 Billion Hong Kong IPO in September

(Source: Nongfu Spring)

China’s bottled water manufacturer Nongfu Spring has planned its initial public offering (IPO) in Hong Kong worth up to $1 billion. Chinese business media outlet IPO Zaozhidao reported on Monday that the leading bottled water producer is expected to list its shares in Hong Kong as early as September if the IPO proceeds.

The Hangzhou-based company reported a 17.3% year-on-year increase in total revenue to 24 billion yuan ($3.4 billion) in 2019, up from 20 billion yuan a year ago. It also recorded a 2019 profit of 4.95 billion yuan, a 20.6% increase from 3.61 billion yuan in 2018, according to its prospectus which was filed in April. In 2018 and 2019, the revenues of the beverage products accounted for 40.1% and 38.4% of the total revenues, respectively.

“During the COVID-19 pandemic, sales of our beverage products dropped compared to the same period in 2019. Based on the information currently available, our revenue and net profit for the three months ended March 31, 2020 were lower than those of 2019,” the company stated in its prospectus. “Our production lines were temporarily suspended after the Spring Festival (January 25), but have already resumed normal operations.”

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Founded in 1995 as one of the top three players in Chinese bottled water and tea market, Nongfu now offers a full range of water products from its 10 natural water sources across the country. The brand has maintained the top market share of China’s packaged drinking water market for eight consecutive years, according to the Frost & Sullivan report. In terms of retail sales in 2019, Nongfu ranks among the top three in the Chinese market for tea beverages, functional beverages and juice beverages.

Nongfu’s future development strategies include further brand building, expansion of production capacity, raising investment in infrastructures and exploration of overseas market opportunities, it said in its filings. It is currently finalizing the purchase of its first overseas water source and production plant, Otakiri Springs, in New Zealand.

Zhong Shanshan, the founder and chairman of Nongfu holds an 87.44% stake in the company, including approximately 17.86% of direct equity and 69.58% through Chinese health product manufacturer Yang Sheng Tang Group, which is the parent company of Nongfu and also chaired by Zhong.

China Capital International Corp (CICC) and Morgan Stanley are sponsoring Nongfu’s Hong Kong IPO.