The energy drink industry has been highly competitive in recent years!
As a leading brand in the energy drink market, Red Bull's market share has always been at the top. In recent years, with the rise of other brands, a pattern of "one super and many strong" has gradually formed.
When it comes to companies that can compete with Red Bull, Dongpeng Beverage is on the list.
Zhang Kun investigated Dongpeng Beverage in June this year, so how did Dongpeng Beverage attract the attention of the "first brother of public offering"?
The operating income of Dongpeng Special Beverage's major product Dongpeng Special Drink will exceed 10.3 billion yuan in 2023, a year-on-year increase of 26.48%. In 2023, the sales volume of "Dongpeng Special Drink" will account for 43.02%, an increase of 6.3 percentage points year-on-year, and the total share will be 12.2 percentage points higher than that of the Red Bull system as a whole, ranking first in the market for the third consecutive year.
This marks that Dongpeng Special Drink has successfully entered the "10 billion single product club" and has become the only local energy drink brand with 10 billion yuan.
Dongpeng Beverage has excellent financial status and outstanding performance in recent years.
First, operating income and net profit attributable to the parent company continued to grow
In the past five years, Dongpeng Beverage's revenue has been growing steadily, from 4.2 billion in 2019 to 11.26 billion in 2023, with a compound annual growth rate of nearly 28%; The net profit attributable to the parent company has grown rapidly, from 570 million in 2019 to 2.04 billion in 2023, an increase of about 3.6 times.
In 2023, the company's operating income will be 11.263 billion yuan, a year-on-year increase of 32.42%; net profit attributable to shareholders of listed companies was 2.040 billion yuan, a year-on-year increase of 41.60%.
In the first quarter of 2024, the company's performance high growth will once again appear, with revenue and net profit attributable to the parent company of 3.48 billion and 660 million respectively, a year-on-year increase of 39.8% and 33.5%.
Second, profitability has improved significantly
From the perspective of return on net assets, the return on net assets of Dongpeng Beverage has exceeded 30% in the past five years, which means that the company's profitability is extremely strong and the return on investment is high, which is comparable to Moutai.
In addition, the return on equity in 2023 has increased significantly compared with 2022, from 31.65% in 2022 to 35.82% in 2023.
According to the DuPont analysis, ROE can be broken down into net sales margin, total asset turnover and equity multiplier, and we can see in the chart below that the significant increase in the past five years is mainly the net sales profit margin.
Net profit margin has grown rapidly since 2019, from 13.56% in 2019 to 18.11% in 2023, and there is also a slight increase in 2022-2023, from 16.94% to 18.11%.
Factors affecting net profit margin include gross margin and period expenses.
1. Gross margin
As we can see from the chart below, the gross profit margin has not changed much, from 42.33% in 2022 to 43.07% in 2023, an increase of only 1 percentage point, so gross profit margin is not the main factor driving the increase in net profit margin.
2. Period Fees
For the analysis of period expenses, we use the cost and expense profit ratio, which is the ratio of operating profit to total cost and expense, which indicates how much profit can be obtained for every dollar of cost paid.
As we can see from the chart below, the cost-to-expense margin is on an upward trend, from 21.25% in 2019 to 29.03% in 2023, indicating an increase in profit per $1 spent on costs. Through strategic planning, refined management, reduction of raw material procurement prices, scale effect and digital operation, Dongpeng Beverage has significantly enhanced its cost control capabilities.
So what are the company's performance growth points in the future?
First, there is still a large market space in the energy drink industry
On the one hand, the market size of functional beverages in China is growing.
Since 2008, the scale of the domestic market has grown rapidly, from only 3.9 billion yuan in 2008 to 57.7 billion yuan in 2022, a full 14-fold increase. It is predicted that the size of China's energy drink market will reach 75.2 billion yuan in 2027.
On the other hand, from the perspective of per capita consumption of energy drinks in developed countries, China's per capita consumption of energy drinks still has great potential.
According to the data, China's annual per capita energy drink consumption in 2021 was 3.8 liters, which is still far from 18.0 liters in the United Kingdom, 17.6 liters in the United States, 15.4 liters in Germany and 11.1 liters in Japan.
As a leading enterprise in the energy drink industry, Dongpeng Beverage will undoubtedly occupy an important position in this market expansion. With its advantages in brand, quality, channels and other aspects, Dongpeng Beverage will be able to fully enjoy the dividends brought by the increase in market scale.
Second, create a second growth curve
Dongpeng Beverage has formulated a development strategy with energy drinks as the first development curve and coffee drinks and electrolyte drinks as the second development curve. We analyze the contribution rate of the second growth curve to revenue and the future development space of the second growth curve.
The contribution rate of other beverages to revenue increased from 3.69% in 2017 to 7.41% in the first half of 2023, an increase of nearly 4 percentage points, especially in the first half of 2023, and the contribution rate of other beverages to revenue increased significantly.
In terms of coffee beverages, the mainland ready-to-drink coffee market size was only 7.044 billion in 2017, exceeded 10 billion in 2021, reached 11.585 billion in 2022, and the compound growth rate from 2017 to 2022 reached 10.46%, and the ready-to-drink coffee market is expected to exceed 15 billion in 2027.
In terms of electrolyte beverages, the market size of electrolyte beverages in mainland China was only 900 million yuan in 2020 and will reach 2.6 billion yuan in 2022. However, compared with Japan's per capita electrolyte consumption of more than 8L per year, the per capita annual consumption of electrolyte drinks in mainland China is only about 1L, and there is still broad room for growth.
As market penetration continues to increase, the second growth curve will create huge growth space for the company.
This growing trend has already begun to emerge.
A company's contract liabilities can reflect the company's order quantity. As can be seen from the chart below, the overall upward trend of contract liabilities in the first quarter of 2020-2023 has increased from 950.3 million yuan in 2020 to 2.607 billion yuan in 2023. The increase in the number of contractual liabilities reflects the increase in the number of orders of the company, which means that the company has more revenue streams and a more stable market position.
What's even stronger is that in the first quarter of 2024, the company's contract liabilities have reached 2.688 billion yuan, and the company is expected to maintain high growth!
Finally, to sum up, Dongpeng Beverage, as a leader in the energy drink industry, has strong profitability and outstanding performance. With the increase in market penetration and the creation of the second growth curve, the company's future development is very worth looking forward to!
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