Text: Internet Jianghu Author: Liu Zhicheng
Dizzy, completely dizzy!
On July 24, Nongfu Spring's share price fell 7.1% to close at HK$30.75 per share, infinitely close to the historical low since its listing!
And by the close of trading on the 25th, it only rose back to 0.33%. So far, since May this year, the total market value of Nongfu Spring has evaporated by more than 180 billion Hong Kong dollars.
With such a decline, even if Nongfu Spring's past performance has been very good, many investors are almost blinded.
Regarding the current round of Nongfu Spring's plunge, from the point of view of time, it seems that this is not caused by the public opinion crisis of the boss Zhong Sui, but seems to have started from the green bottle of pure water and the price war since it was listed in May.
In fact, it is not difficult to understand when you think about it. After all, whether the green bottle of pure water can be made or not, it is not a matter of two words. But the health value of the red bottle of natural water has been largely disrupted. And now that the price war of pure water has reached less than 7 cents per bottle, can Nongfu Spring's profits be maintained this year?
Perhaps because he saw the worries of the capital market, Nongfu Spring also began to think of some ways to break the situation.
For example, starting with the increase in the price of bottled water......
Bottled water price increase? Will Nongfu Spring become the second Master Kong?
With the stock price sluggish, recently, there was news that the price of Nongfu Spring's vat of water had "quietly" increased.
The purchase price was raised from 15 yuan to 18 yuan......
Although Nongfu Spring has not yet made a clear response to this, many investors and dealers, including me, feel that this is a bit like "unreasonable hands".
Why? If the purchase price of bottled water rises, it is undoubtedly asking dealers for profits, in order to improve Nongfu Spring's profit level.
But the question is, will dealers finally pass on the price pressure to consumers?
Let's make an assumption: 1. If it is conducted, then there will be a problem. Regardless of the reason for the price increase of Nongfu Spring, if other brands of bottled water do not follow suit, the price of a barrel of Nongfu Spring will be much more expensive than other brands for consumers.
In this way, this is not like Master Kong, who forced himself on the opposite side of consumers because of the price increase some time ago?
At that time, in the bottled tea/juice drink market, Master Kong took the lead in announcing a price increase, but Uni-President and Nongfu Spring have not followed suit. In the end, Master Kong not only carried all the public opinion firepower of consumers alone, but also pushed his market sales to competing brands......
Therefore, Master Kong's lessons from the past are here, and what will be the result of Nongfu Spring of the later master?
2. If the conduction is not good, so large dealers are fine, and some small dealers may be uncomfortable. After all, although the profit of Nongfu Spring bottled water was the highest in the past, especially in the market in 2022, the water station can earn 15.6 yuan from a bucket of Nongfu Spring, and a bucket of Jingtian and Cestbon can earn 15 yuan.
But now the profit has been compressed by 3 yuan all of a sudden, and if the labor and rent costs of the water station are removed, the retail water stations may not make money.
In this case, small and medium-sized water stations may abandon Nongfu Spring and turn to other brands. After all, this thing must be recommended to sell to whoever makes more money.
Moreover, in the cognition of most bottled water consumers, there is almost no obvious difference between water and water, so there are few consumers who do not drink Nongfu Spring. After all, Nongfu Spring has brand protection, and other brands are not without ......
Looking at it this way, no matter how Nongfu Spring weighs it, it doesn't seem to be a wise decision at this time.
Of course, since Nongfu Spring has not yet made a clear response to the price increase, we can only make a prediction and analysis based on the price increase.
Green bottle of pure water: Hit Nongfu Spring on the top, attack Cestbon and Wahaha down?
In fact, even if we don't talk about bottled water, we can clearly observe that Nongfu Spring is now anxious about the growth of packaged drinking water business.
Tianyancha APP data shows that from 2021 to 2023, the revenue growth rate of Nongfu Spring's packaged drinking water revenue will be 22.1%, 7.1% and 10.9% respectively, showing obvious sluggish growth.
And for a long time in the past, Nongfu Spring's packaged drinking water was higher than the revenue of beverage products. However, in 2023, Nongfu Spring's revenue from packaged drinking water products will be 20.262 billion yuan, accounting for 47.5% of the total revenue, and the revenue from beverage products will account for 51.7%, achieving a reversal.
Perhaps because of this, Zhong Sui will "break his promise" and launch a green bottle of pure water this year.
As for the price war that followed, in my opinion, this can only be regarded as a very risky move for Nongfu Spring, but it is difficult to say whether it is good or bad.
Because in the current bottled water market where prices are transparent and products lack differentiation, Nongfu Spring wants to quickly make green bottle pure water, and the price war is indeed a good development idea.
But the problem is that the relationship between green bottle purified water and red bottle natural water is a competing product. Nongfu Spring Green Bottle is fighting a price war, and Red Bottle Natural Water will inevitably be forced to reduce prices. Just like now, the price of many supermarkets has been lowered to 1.2 yuan./bottle.
In this way, the more ruthless the price reduction of green bottle pure water, the more ruthless the price reduction of red bottle natural water; The better the cheaper purified water sells, the worse the performance of more expensive natural water will be. As for the end, even if we don't talk about whether the revenue of the two can make up for each other's gap, just talking about this profit level, Nongfu Spring's drinking water business may have a big change......
This is a big negative for the visible future, so it is not incomprehensible for the capital market to vote with its feet now.
Of course, Nongfu Spring's price war is not without benefits. Previously, we have put forward a point of view: the price war may be Nongfu Spring's "opposite" in order to blow up the value of C'estbon and Wahaha's 2 yuan pure water, and guide consumers to re-choose natural water.
After all, who is disturbing the current price of Nongfu Spring pure water below one yuan? Is it Cestbon?
No, it is the price band and value standard of the entire domestic packaged pure water brand players.
Under the ultra-low price, Nongfu Spring is easy to take advantage of this to plant the seeds of doubt in the consumer's perception that "the original 2 yuan price of pure water such as Cestbon is actually not worth it......
So from the perspective of mass consumer psychology, why is the red bottle of Nongfu Spring more expensive than the green bottle? In the process of thinking about price comparison, the marketing conclusion of Nongfu Spring that natural water is healthier than pure water can be easily obtained.
In this way, no matter whether the follow-up green bottle pure water is implemented at a long-term low price or reverts to a price of 2 yuan, Nongfu Spring Red Bottle Natural Water seems to be able to usher in a large number of users and consumers again......
Of course, "doing the opposite" is not without its problems. For example, for those users who simply want to quench their thirst, whatever you say, cheap and big names are king.
In addition, even if Nongfu Spring can pull down the price band of pure water by 2 yuan, even if Nongfu Spring can accept this time and investment, will the shareholders and investors behind it be willing?
In short, if Nongfu Spring does well, it can crush others with cost; If you don't go well, you just pull down the brand premium of Nongfu Spring's little sweetness. But no matter what the outcome is, in the era of involution overflow, the market will not allow the existence of high-margin products without real brand effect......
Zhong's "trust asset", Nongfu Spring's valuation ceiling?
If we simply talk about Nongfu Spring's future business performance, in fact, this is basically the end.
Because of Nongfu Spring's remaining beverage business, including tea, juice, etc., in 2023, it will achieve revenue of 21.094 billion yuan, a year-on-year increase of 54.84%.
It's not that there is no problem with good performance, in fact, there are, for example, the fastest-growing sugar-free tea sector, now the market has not only flooded into many new brand enterprises, but also gradually began to fight a price war.
But the problem is that compared with cutting-edge brands, Nongfu Spring now needs product power and product power; To have channels, there are channels; As for the comparison with old giants such as Master Kong and Uni-President, the first-mover advantage of "Oriental Leaves" is quite advanced, and it will not be surpassed in a while.
In addition, even putting aside Nongfu Spring's ability to create new products, according to what Zong Qinghou said, the beverage industry will always be a sunrise industry, which is enough for Nongfu Spring's beverage sector to last for many years.
Don't believe us, let's take a look at Master Kong, have you run out of any popular new products over the years?
No, but with a few classic drinks such as iced tea. In 2023, Master Kong's beverage business revenue will be 50.939 billion yuan, still a year-on-year increase of 5.39%.
So let's go back to the capital market, don't look at Nongfu Spring now falling like this, but there are still many investors who feel that Nongfu Spring's 26 times PE valuation is very expensive and not worth buying.
Behind this, part of it is due to the judgment of the packaged drinking water business, but more of it is the concern about Nongfu Spring's shareholding structure.
After all, the shareholding ratio of the actual controller, Zhong Sui, is too concentrated, with a direct + indirect shareholding ratio of more than 80%.
This brings us to the core of trust issues. Due to the misalignment of the interests of major shareholders and countless retail investors, once the valuation is too high, major shareholders can reap huge benefits by simply reducing their holdings. Therefore, there may be the problem of joint manipulation and artificially creating asset bubbles with high ROE.
But the embarrassing thing is that on the one hand, no one can guarantee that major shareholders will not reduce their holdings;
On the other hand, Zhong's shareholding is unlikely to be significantly reduced in the short term. And just like a snowball big V said, if he really wants to reduce his holdings, there may not be people and institutions who can catch it.
In this way, this has naturally become a dammed lake that has been pressing on the valuation of Nongfu Spring for a long time......