Summary of Eastroc Beverage Conference Call Company Overview - **Company Name**: Eastroc Beverage - **Stock Tickers**: 9980.HK / 605499.SS - **Industry**: Beverage Industry, specifically focusing on functional and energy beverages Key Points Coverage Initiation and Target Price - Coverage on Eastroc's H-shares initiated with a "Buy" rating and a target price of HK$408.8, aligning with the target price for its A-shares [1] - Anticipation of no persistent valuation discount between H-shares and A-shares due to limited high-quality beverage companies in the HK market [1] Financial Forecasts - Forecasted net profit (NP) growth of 27% in 2026 and 22% in 2027, marking the fastest growth within the China consumer staples sector [1] - Expected sales revenue for 2023 at Rmb11,263 million, increasing to Rmb15,839 million in 2024, with a projected growth rate of 32% [42] Market Position and Share - Eastroc holds the No.1 market share in China's energy beverage market, increasing from 5.3% in 2015 to 43.7% in 2024 [2] - Sales from non-Guangdong markets rose from 61% in 2022 to 76% in the first half of 2025, indicating successful nationwide expansion [2] Product Expansion and Sales Growth - Expansion into the sports beverage category resulted in sales growth of 2.8x year-over-year in 2024 and 2.1x in the first half of 2025 [2] - Contribution from sports and other beverages increased from 4% and 5% in 2023 to 14% and 8% in the first half of 2025, respectively [2] Digitalization and Operational Strategy - Strong digital infrastructure and partnerships with over 3,000 distributors enhance targeted marketing and operational efficiency [3] - Eastroc's strategy focuses on stable pricing and fair returns across the value chain, contrasting with competitors that rely on aggressive price hikes [3] Use of Proceeds from Hong Kong Offering - Planned allocation of proceeds includes: - 36% for enhancing production capacity and supply chain upgrades - 15% for brand building and consumer engagement - 11% for nationwide expansion and channel network refinement - 12% for overseas business expansion and potential acquisitions - 10% for advancing digitalization capabilities - 6% for product development and portfolio expansion - 10% for working capital and general corporate purposes [40] Financial Metrics and Performance - Gross profit margin (GPM) projected to be 43.1% in 2023, increasing to 45.7% by 2026 [42] - Net profit margin (NPM) expected to rise from 18.1% in 2023 to 22.6% in 2027 [42] - Significant year-over-year growth in net profit forecasted, with a 42% increase in 2023 and a 63% increase in 2024 [42] Competitive Landscape - Eastroc is positioned as a top buy in the China consumer sector, alongside Nongfu Spring and UPC, while Tingyi is rated as a sell [1] Additional Insights - The beverage market in China is projected to grow significantly, with functional beverages expected to reach a market size of Rmb281 billion by 2029, growing at a CAGR of 11.0% from 2024 to 2029 [10] - The competitive landscape shows Eastroc's strong branding and operational capabilities as key factors in maintaining its market leadership [2][3] This summary encapsulates the essential insights from the conference call regarding Eastroc Beverage's market position, financial forecasts, strategic initiatives, and competitive landscape.

The Stock Exchange of Hong Kong Limited and the Securities and Futures Commission take no responsibility for the contents of this Post Hearing Information Pack, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Post Hearing Information Pack. Post Hearing Information Pack of Eastroc Beverage (Group) Co., Ltd. 東鵬飲料（集團）股份有限公司 (the "Company") (A joint stoc ...

Summary of Eastroc Beverage Conference Call Company Overview - **Company**: Eastroc Beverage (605499.SH) - **Industry**: Functional Beverage Market in China - **Market Position**: No.1 market share in China's energy beverage market since 2021, with a market share increase from 5.3% in 2015 to 43.7% in 2024 [2][20] Core Insights - **Growth Projections**: Net profit (NP) is expected to grow by 36% in 2025, 25% in 2026, and 20% in 2027, marking the fastest growth in the China consumer staples sector [1][4] - **Sales Performance**: Sales from non-Guangdong markets increased from 61% in 2022 to 76% in 1H25, indicating successful nationwide expansion [2] - **Product Expansion**: The company has expanded into sports energy beverages, with sales growth of 280% YoY in 2024 and 214% YoY in 1H25 [49][50] Financial Highlights - **Earnings Summary**: - 2023 NP: Rmb2,040 million, EPS: Rmb3.923 - 2024 NP: Rmb3,327 million, EPS: Rmb6.397 - 2025E NP: Rmb4,488 million, EPS: Rmb8.630 [5] - **Valuation Metrics**: High return on equity (ROE) projected at 47.5% in 2024 and over 50% in 2025-2027 [4] Market Dynamics - **Functional Beverage Market Growth**: The functional beverage sector is projected to grow at a CAGR of 11% from 2024 to 2029, with energy beverages accounting for 66.9% of this market [16][19] - **Competitive Landscape**: Eastroc's value-for-money positioning has allowed it to gain market share from premium-priced competitors [3] Strategic Initiatives - **Digital Infrastructure**: The company utilizes a highly digitalized operation with "Five-code Integration" for targeted marketing and efficient sales channel management [3][82] - **Consumer Engagement**: Eastroc employs targeted marketing strategies based on detailed consumer profiling, enhancing brand loyalty and sales performance [79][80] Product Portfolio - **Diverse Offerings**: Eastroc's product range includes energy beverages, sports beverages, tea, coffee, and plant-based protein drinks, catering to various consumer preferences [54][63] - **Flagship Product**: Eastroc Super Drink is a leading product in the energy beverage category, recognized for its quality and affordability [33][74] Marketing and Branding - **Brand Recognition**: The company has established strong brand recognition through effective marketing campaigns and sponsorship of major sporting events [93][94] - **Innovative Packaging**: Eastroc pioneered PET packaging for energy drinks, enhancing convenience and consumer appeal [41][44] Conclusion - **Investment Recommendation**: Coverage initiated with a Buy rating and a target price of Rmb350.50, reflecting expected continued growth and market leadership [1][6]