Investors are closely watching as a beverage behemoth with a market cap of hundreds of billions charges towards a Hong Kong IPO. Since 2026, the enthusiasm for A-share listed companies to seek secondary listings in Hong Kong has remained high. Following the footsteps of Howe Group and GigaDevice, the market may welcome the third "A+H" listed company this year. On January 26, Eastroc Beverage (Group) Co., Ltd. (hereinafter referred to as "Eastroc Beverage") officially released its H-share global offering announcement on the Hong Kong Stock Exchange. Trading is expected to commence on February 3, with the stock code 09980.
The company plans to globally issue 40.8899 million H-shares, with a maximum offer price not exceeding HK$248 per share. Calculated at this maximum price, the total fundraising size is estimated to reach HK$10.1 billion, positioning it among the top consumer sector IPOs on the Hong Kong market in recent years in terms of funds raised. According to the prospectus, Eastroc Beverage is the leading functional beverage company in China, boasting the highest revenue growth rate among the world's top 20 listed soft drink companies. The latest performance forecast indicates that the company's estimated revenue for 2025 will reach between RMB 20.76 billion and RMB 21.12 billion, representing a year-on-year increase of 31.07% to 33.34%. However, this growth rate has moderated compared to the previous year's revenue growth of 40.63%. Over $600 million in global capital has been "scrambling" to participate in the offering. Eastroc Beverage's history dates back to 1987, when it was a state-owned enterprise operating solely as a soybean milk beverage factory (named Shenzhen Soybean Milk Beverage Factory). Facing bankruptcy due to poor management, Lin Muqin led 20 employees to successfully acquire all equity of the old Eastroc Beverage for RMB 4.6 million, marking the beginning of the company's privatization journey. Subsequently, leveraging a market strategy of "low prices + encircling the cities from the countryside," the company precisely targeted mass consumption scenarios, quickly gained market traction, and entered a phase of rapid development. On May 27, 2021, Eastroc Beverage (605499) officially listed on the main board of the Shanghai Stock Exchange, becoming the "first functional beverage stock" on the A-share market. According to a Frost & Sullivan report, by sales volume, Eastroc Beverage has ranked first in the Chinese functional beverage market for four consecutive years since 2021, with its market share growing from 15.0% in 2021 to 26.3% in 2024. By retail sales value, the company was the second-largest functional beverage company in 2024, holding a market share of 23.0%. It is noteworthy that the maximum H-share offer price for Eastroc Beverage is set not to exceed HK$248 per share. Based on the closing A-share price on January 27, 2026, the A-H share discount rate is approximately 11%. An industry expert pointed out that the current average A-H share discount rate for the consumer sector is generally around 20%. For instance, Tsingtao Brewery has an A-H discount rate of 28%, and Foshan Haitian Flavouring & Food Co., Ltd. has a discount rate of 20.88%. Typically, companies with higher market caps exhibit lower relative discount rates. Eastroc Beverage's A-H discount rate is below the industry average, suggesting its Hong Kong share pricing is at a reasonably low level. An investment banking professional from GF Securities revealed that the core of a company's IPO pricing strategy is to ensure a successful issuance while meeting fundraising needs, and to leave room for potential post-listing stock performance. So, what is the rationale behind Eastroc Beverage's confidence in opting for a high pricing strategy? From a fundamental perspective, Eastroc Beverage's high growth is highly attractive against the backdrop of slowing growth for traditional beverage giants. The latest performance forecast shows the company expects 2025 revenue between RMB 20.76 billion and RMB 21.12 billion, a year-on-year increase of 31.07% to 33.34%. Net profit attributable to shareholders is forecasted to be between RMB 4.34 billion and RMB 4.59 billion, representing growth of 30.46% to 37.97%. The expert believes Eastroc Beverage currently offers some valuation appeal. Based on PE multiples, the company's current P/E ratio is around 30x, lower than the average valuation for A-share consumer stocks. International capital also tends to favor stable, profitable consumer leaders. Furthermore, a prestigious lineup of cornerstone investors has bolstered confidence in Eastroc Beverage's pricing. The prospectus discloses that the Hong Kong IPO attracted 15 cornerstone investors, including the Qatar Investment Authority (QIA), Temasek, BlackRock, UBS Global Asset Management, J.P. Morgan Asset Management, Fidelity, PinPoint, Orchid Asia, Sequoia China, Tencent Holdings, and the Kerry Group. Their aggregate subscription amounts to $640 million, accounting for 49.2% of the total offering size (assuming the over-allotment option is not exercised). The participation of these cornerstone investors effectively "locks in" a substantial base of shares ahead of the listing.
Among them, the Qatar Investment Authority (QIA), leading the investment with $150 million, is particularly noteworthy. The prospectus indicates that QIA is the sovereign wealth fund of the State of Qatar, established in 2005 to manage and invest the nation's reserve funds. Reportedly, this marks QIA's first participation as a cornerstone investor in an A-to-H share IPO project, its first cornerstone investment in a consumer IPO, and also its largest cornerstone investment by amount in history. Against the backdrop of a Hong Kong new share market where liquidity has not fully recovered, such a cornerstone list is uncommon. Industry insiders note that this represents not just a financial endorsement but a vote of confidence from top global capital in China's functional beverage sector, as well as in Eastroc Beverage's business model and long-term growth logic. Seeking growth overseas. However, behind the spotlight of its "A+H" listing, Eastroc Beverage still faces challenges and skepticism that cannot be ignored. Is its myth of high growth sustainable? The expert suggests that Eastroc Beverage currently relies heavily on a single product. Its core product, Eastroc Super Drink, contributes approximately 85% of revenue, while the performance of new products is relatively less stellar. Additionally, the company's contribution in the booming coffee and tea-related segments is low.
The prospectus shows that in the first three quarters of 2025, Eastroc Super Drink generated revenue of RMB 12.563 billion, accounting for a significant 74.6% of total revenue, with a high gross margin of 50.1%, remaining the primary driver of performance growth. However, in terms of growth rate, its year-on-year increase was 19.35%, showing a deceleration compared to previous revenue growth rates.
The new product "Bushui La" electrolyte beverage, on which the company pins high hopes, achieved revenue of RMB 2.847 billion in the first three quarters of 2025, surging 134.84% year-on-year. However, its contribution to total revenue was only 16.9%, and its gross margin was just 34.2%, currently offering limited contribution to overall profitability. Furthermore, other beverage products accounted for only 8.5% of revenue in the first three quarters of 2025, with a gross margin of merely 14.9%. Against the backdrop of the Red Bull brand's recovery and continued market penetration by new players like Genki Forest, the market moat of Eastroc Super Drink is being tested. Eastroc Beverage's decision to list in Hong Kong at this juncture aligns precisely with the pressing needs of its overseas expansion strategy. The expert stated that the competitive landscape of the domestic functional beverage market has stabilized. With Eastroc Beverage's market share already exceeding half, further growth space is relatively limited. In contrast, its overseas revenue is almost negligible, and the strength of its global layout is insufficient overall. Therefore, the funds raised from this Hong Kong listing will be primarily directed toward building supply chains and expanding channels in the Southeast Asian market. Simultaneously, leveraging the Hong Kong stock market as an international capital platform can effectively enhance the brand's international recognition, providing crucial support for the implementation of the company's overall overseas strategy. Regarding the use of proceeds, the prospectus clearly states that approximately 8.0% of the net proceeds will be used to establish supply chain infrastructure, including warehouses, in key overseas markets to meet rapid growth demand there and ultimately achieve localized operations. Approximately 12.0% of the net proceeds will be used to expand overseas market operations over the next three to five years, exploring potential investment and acquisition opportunities. Public information shows that Eastroc Beverage products have been exported to 25 countries and regions. The company has established subsidiaries in Indonesia, Vietnam, and Malaysia, and plans to use its bases in Hainan and Kunming as export hubs for Southeast Asia. However, the proportion of overseas revenue remains extremely low, at only RMB 14.81 million in the first half of 2025, accounting for approximately 0.14% of total revenue. Huaan Securities pointed out in a research report that the sales value of the energy drink market across 11 Southeast Asian countries in 2024 was $4.2 billion (approximately RMB 30 billion), close to half the size of the Chinese market. The top three markets by capacity are Vietnam, Cambodia, and Thailand. Meanwhile, the Southeast Asian energy drink market's compound annual growth rate over the past five years was 6.2%, higher than China's 4.7%. The market generally expects that if Eastroc Beverage's Hong Kong listing is successful, its overseas strategy will enter a substantive implementation phase, potentially opening up a new second growth curve for the company. As of the market close on January 27, 2026, Eastroc Beverage's A-shares closed at RMB 245.81 per share, down 1.99%, with a total market capitalization of RMB 127.824 billion. Over the past six months, the stock has declined by 17.36%.
Comments