[Text | Interface, Yuan Yingqi]

Nongfu Spring, which has repeatedly said that there is no need to list, finally decided to list on the Hong Kong Stock Exchange. The company that mainly produces "a little sweet" mineral water has a financing scale of no more than 1 billion US dollars, but it is a high probability event that it will enter the 100 billion market value club after listing.

We carefully read the prospectus submitted by Nongfu Spring to the Hong Kong Stock Exchange and found that the company had mixed feelings.

Nongfu Spring "not bad money"

Nongfu Spring was established in 1996, and its founder Zhong Liangyi holds 87.4% of the shares. The company’s main business contributes about 95% of the total operating income. The main products include drinking water, tea beverages, functional beverages and fruit juice beverages, accounting for 60%, 13%, 16% and 10% of the revenue respectively. Among them, drinking water and fruit juice beverages have grown rapidly.

Image source: Prospectus, Interface News Research Department

According to the prospectus, Nongfu Spring has maintained steady growth in the past three years. From 2017 to 2019, the income was 17.491 billion yuan, 20.475 billion yuan and 24.021 billion yuan respectively, with a compound annual growth rate of 17.2%. Nongfu Spring achieved net profit of 3.385 billion yuan, 3.612 billion yuan and 4.954 billion yuan in the past three years, with a compound annual growth rate of 21.0%.

Image source: Prospectus, Interface News Research Department

In 2019, the comprehensive gross profit margin of Nongfu Spring was as high as 55.4%. Mainly due to the gross profit margin of 60.2% of the largest drinking water product. The gross profit margins of other categories such as tea beverages, functional beverages and fruit juice beverages were 59.7%, 50.9% and 34.7% respectively.

In terms of net profit, the net profit rate of Nongfu Spring rose to 22.8% in 2019, of which sales expenses accounted for the largest proportion of the three fees. Specifically, sales expenses accounted for 24.2% of operating income, and the most important ones were transportation expenses and advertising expenses, which were 2.53 billion and 1.22 billion yuan respectively, accounting for 10.5% and 5.1% of operating income, respectively.

In terms of cash, Nongfu Spring adopts the first payment and then the goods transaction method, and the book receivables are very small. From 2017 to 2019, the company’s net operating cash inflow was greater than the net profit of the year, especially in 2019, the net operating cash inflow was as high as 8.73 billion yuan. From 2017 to 2019, the book structured deposits were 2.04 billion, 3.60 billion and 200 million yuan respectively. The average interest rate earned was between 4.0% and 4.9%.

The sharp decrease in cash in 2019 was due to the concentrated dividend of Nongfu Spring up to 9.50 billion yuan before listing. Among them, the major shareholders received 8.20 billion yuan. Previously, although Nongfu Spring also had annual dividends, the amount was 2-300 million yuan. And the total financing of Nongfu Spring is only 1 billion US dollars.It is certain that Nongfu Spring did not choose to go public because of a lack of funds.

What is the valuation after going public?

Master Kong Holdings, the equivalent producer of mineral water in Nongfu Spring, has been listed on the Hong Kong stock market. In 2019, Master Kong Holdings’ beverage business contributed HK $39.70 billion to operating income, which was greater than Nongfu Spring’s operating income. But net profit was only HK $3.72 billion, far less than Nongfu Spring’s 4.95 billion yuan.

At present, the market value of Tingyi Holdings is 77.20 billion Hong Kong dollars, corresponding to the price-to-earnings ratio of about 20.8 times in 2019. It is estimated that the total market value of Nongfu Spring after listing is at least about 130 billion Hong Kong dollars. In fact, Nongfu Spring is better than Tingyi Holdings in terms of profitability and growth, and the market may give a higher valuation.

According to the prospectus, the drinking water market is still in a stage of rapid development. According to Nielsen’s forecast, it is still expected to maintain a growth rate of about 10% in the next five years. Compared with the beer and condiment market, the drinking water market has more room. Based on the high concentration of the drinking water market, it is also possible to produce a leader with a larger market value than Budweiser Asia Pacific (1876.HK) and Haitian Flavor (603288.SH) in the long run. The average price-to-earnings ratio valuation of beer in the Hong Kong stock market is 30-40 times. The average valuation of soy sauce and vinegar in the class A share market is more than 40 times. Based on this, we have predicted the market value of Nongfu Spring.

Image source: Interface News Research Department

The troubles of Nongfu Spring

Although the situation is good, Nongfu Spring is not a smooth road.

First of all, the drinking water business depends on the source of water, and the bottleneck facing the long-term growth of Nongfu Spring is the limited source of water. According to relevant laws and regulations, units and individuals who directly extract water from natural resources (such as rivers, lakes and groundwater) need to obtain a water extraction license and pay a water resource fee. Enterprises need to extract water according to the approved annual water extraction plan. Moreover, mineral water has the dual attributes of water resources and mineral resources. The production of mineral water should also apply for a mining license according to law. In other words, the scarcity of water sources on the one hand helps enterprises to establish high industry barriers, and on the other hand restricts enterprises to expand production capacity. It is conceivable that with the development of the industry, there are fewer and fewer untapped water sources.

The situation of Nongfu Spring’s newly obtained water sources in recent years is not optimistic. At present, Nongfu Spring has a total of 10 water sources. The main production bases are still Qiandao Lake in Zhejiang, Changbai Mountain in Jilin, Danjiangkou in Hubei and Wanlv Lake in Guangdong, which were obtained before 2005. With the increase in environmental awareness, the water withdrawal from water sources obtained by Nongfu Spring in recent years has become smaller and smaller. In 2019, the newly obtained water withdrawal from water sources was only 504 thousand cubic meters per year. Although the approved water withdrawal from water sources currently owned by Nongfu Spring is much larger than the actual production capacity of the company, the company does not have the problem of insufficient water withdrawal in the short term. However, products concentrated in water sources in Zhejiang, Guangdong, Jilin and Hubei are also limited by the transportation radius.

Nongfu Spring has less water sources that can produce mineral water, which is not conducive to product upgrades in the future. In addition, the average ton price of Nongfu Spring drinking water has declined for two consecutive years, the company explained, because of the increase in sales of large-packaged drinking water with lower unit prices. In the short term, Nongfu Spring may face the risk of lower gross margins.

Due to the scarcity of domestic water sources, Nongfu Spring has begun to go overseas. Nongfu Spring has acquired Otakiri Springs, a New Zealand bottled water company. The prospectus revealed that Nongfu Spring will look for suitable acquisition targets in the future. However, the overseas market is more mature than the Chinese market, and the growth space is limited. The risk of "going out" is really not small.

Image source: Prospectus, Interface News Research Department

Secondly, Nongfu Spring also faces the problem of "succession". The company has five executive directors. Among them, the founder Zhong Shuzi currently serves as the chairperson and general manager of the company, with a shareholding of 87%. Appropriately reducing the founder’s shareholding ratio through listing can achieve the effect of optimizing the shareholding structure and reducing decision-making risks. At present, Zhong Shuzi is 66 years old and has been deeply involved in the operation of Nongfu Spring. Another executive director, Guo Zhen, deputy general manager in charge of the overall operation and production of Nongfu Spring, is also 62 years old. Zhong Shuzi, the son of Zhong Shuzi, is currently a non-executive director of the company and does not participate in daily operations. Zhong Shuzi joined the group in 2014 and is currently the general manager of Yangshengtang (Nongfu Spring Holding Company) Brand Center.

It is worth mentioning that at the same time as the listing of Nongfu Spring, another company controlled by founder Zhong Shanyuan, 603392.SH, landed on the class A share main board on April 29. The current market value is 6 billion yuan, and the daily limit has not been opened. In the Hurun wealth list in 2020, Zhong Shanyuan was listed with 14.10 billion yuan. With the listing of the above two companies, his worth is expected to rank among the top five on the rich list.

BYD has also produced a million-class luxury off-road SUV and super-run. Can you believe it? On January 5, 2023, BYD looked up to the brand and brought its million-class luxury off-road SUV to look up to U8 and super-running U9 to meet with you. The appearance of the two cars attracted much attention, so the appearance of the two cars was really a technological revolution? Or is it a gimmick? What can we expect from U8 and U9?

Brand-new design concept to create a dream design belonging to new energy vehicles

BYD looks forward to the design of U8 and U9, which makes us shine at the moment. The brand-new design concept makes us feel the dream design of new energy vehicles.

BYD looks up to U8 and adopts "dimension door" design language. The middle net has a large area, and the interior is decorated with stars. The design of daytime running lights and headlights on both sides is the open "dimension door". Looking up to the LOGO decoration, looking up to the inspiration of the LOGO design, Oracle Bone Inscriptions’s word "electricity", is in line with its identity as a new energy vehicle.

BYD looks up to U8′ s straight body lines, full of masculinity, heavy bumper and full rear design. BYD looks up to U8′ s design, which is tough, and the whole design does not lose the brand-new Land Rover Defender, the representative of hard-core off-road vehicles.

BYD’s look at the design of U9 is also very dreamy. The lines of BYD looking up at U9 are very similar to those of Audi R8, but the design of headlights and daytime running lights of BYD looking up at U9 is the main manifestation of its dreamy appearance design. Modular daytime running lights surround the headlights, creating a strong visual impact.

BYD expects U9 to adopt frameless scissor door design, which is also the design style of supercar. The rear matrix runs through the taillight design, which is integrated with looking up at the LOGO. The lower bumper has aerodynamic design, and the angular lines together create a strong sense of movement.

"Easy Sifang" four-motor drive platform provides super power.

BYD hopes that U8 will be equipped with a four-motor all-wheel drive system for the first time, and BYD named the system "Easy Sifang". From the name point of view, BYD looks up to U8 and seems to have extraordinary off-road ability. It is easy to reach all directions, which means a lot of charm. Looking up as a high-end brand, the core technology is indispensable, and the existence of "Easy Sifang" is the true embodiment of BYD’s strong core technology.

"Easy Sifang" provided BYD with four drive motors for U8, with the highest speed of 20,500 r/min and the total horsepower of the four drive motors exceeding 1100Ps. Such a powerful power on a large SUV can still make it have amazing acceleration. Of course, it also provides power guarantee for it to cope with all kinds of complex terrain.

The "Easy Sifang" platform can accurately control the drive motors of four wheels. When it comes to vectors, many small partners should be interested immediately. Yes, it is precisely because "Easy Sifang" can carry out vector control on the drive motors of four wheels, so BYD can complete two commands of lateral movement and in-situ U-turn by looking up at U8.

Is "Yi Sifang" a technological revolution or a gimmick?

The "Easy Square" platform is different from the three-motor drive platform. The three-motor platform adopts the arrangement form of single motor on the front axle and double motors on the rear axle. The key to the arrangement form of three motors is to control the driving balance. However, the drive of "Easy Sifang" four motors is more balanced, and the control module can complete the distribution of driving force output to each wheel only by analyzing the actual situation of the vehicle in different States, thus completing the smooth operation and power output of the vehicle.

In addition, BYD looks up to U8 as an off-road SUV, and its off-road capability is an important attribute. For steep off-road slopes, it is an important assessment item for off-road SUVs. BYD looks to U8 to be equipped with the "Easy Sifang" four-wheel drive platform, and the four drive motors need strong electric energy guarantee. Therefore, BYD looks to U8′ s power module to increase its energy density, and at the same time, it also brings greater vehicle quality.

Even with a large vehicle mass, BYD will have a big disadvantage when looking up to U8, but the driving force and torque output of the four driving motors of "Easy Sifang" can be adjusted more accurately, which is difficult for the three-motor driving platform. In addition, the "Easy Sifang" platform can accurately vector control the driving motors of four wheels, and completely reconstruct the new energy vehicle from three dimensions of perception, decision-making and execution. With the motor driving system with stronger perception, the dynamic response speed of the wheel ends of the four wheels of the vehicle can reach millisecond level, so the faster response speed can also ensure that the vehicle can make faster adjustments when it encounters torque imbalance when climbing, and ensure the smooth passing of the vehicle.

To sum up, the two models that BYD looks forward to are not gimmicks, they bring us not only the dream and shine of the design, but also the surprise and touch brought by the technological revolution.

Write at the end:

BYD expects the U8 to be priced at 800,000-1.5 million yuan. As a million-level luxury off-road SUV, BYD still has a lot to do. After all, the promotion of brand power is a key issue in positioning a million-level luxury model. From the perspective of technology and design, the two models that BYD looks forward to already have the strength of millions, but whether they can finally get the favor of consumers, let us wait and see.

1905 movie network news The high-profile works commemorating the 20th anniversary of digital baby held the 20th anniversary carnival in many cities across the country on October 24th, which triggered a heated discussion. The official recently released a special event to review the wonderful moments at the scene, which is full of emotion.

The 20th Anniversary Carnival has received strong support from fans since the official announcement, and everyone actively participated in the registration and let this enthusiasm continue from online to offline. The most wonderful moment of this carnival, which has been prepared for a long time, is the chorus of "Butter-fly" by fans after the screening. When all the children who were invited to sing together, "May we always embrace infinite dreams and cross the ruthless world", the eternal touch brought by this moment will become a shining existence in the memory of every fan.

After the screening, many fans burst into tears, and it was difficult to calm their emotions: "Digital Baby grew up with me, which is my whole childhood, so I can’t help crying when I say goodbye to them." "When I saw Meimei’s flying hat killing and Taiyi’s whistle again, I really cried instantly." "The original protagonists who thought that they would always be there ushered in their last story. It turned out that this is the feeling of growing up."

After harvesting the tears of countless fans, this 20th anniversary work also brings unique fighting scenes to fans and friends. "It’s really different to watch on the big screen, and it’s really cool." "Digital Baby: The Last Evolution" is different from other theater versions, so it must be watched in the cinema. ""It’s very gorgeous, with dazzling visual impact, and the picture has made great progress compared with the previous one! " It can be seen that this 20th anniversary work is remarkable in terms of feelings and production, and will never disappoint fans.

"Digital Baby: The Last Turn" mainly tells that Yagami Taichi and Ishida Yamato, the first protagonists of the digital baby series, have grown into 22-year-old adults accompanied by their respective digital babies, but their quiet lives have been broken by the frequent coma incidents of "called children" around the world. In order to keep the world from falling into crisis, the first generation of grown-up protagonists and digital baby have started the "last evolution", and this 20-year adventure will come to an end.