Chinese energy drink maker Eastroc fails to pop in subdued Hong Kong debut
It makes functional beverages, which are drinks formulated with added ingredients such as electrolytes or vitamins
[HONG KONG/SINGAPORE] China’s Eastroc Beverage, a maker of energy drinks, made a muted Hong Kong trading debut on Tuesday (Feb 3) after raising about US$1.3 billion in a share sale.
Its shares closed at HK$251.80, just 1.5 per cent higher than their offer price of HK$248 each, giving Eastroc a market capitalisation of around HK$141.2 billion (S$23 billion).
The share sale will likely be the second-largest in the city so far this year. China’s biggest pig breeder Muyuan Foods aims to raise US$1.4 billion in an offering and will debut on Friday.
Kenny Ng, a securities strategist at China Everbright Securities International, said that the investor enthusiasm in Hong Kong listings leans toward new-economy, smart-manufacturing and technology firms, due to their stronger growth prospects.
He added: “In contrast, stocks from traditional economic sectors, such as Eastroc, often exhibit more stable trends following their listing.”
The company plans to use the proceeds for production capacity expansion and supply chain upgrades, brand building, overseas growth and potential investments and acquisitions.
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Eastroc, which is also listed in Shanghai, sold 40.9 million shares at the top end of its marketed range. The retail portion was 5,746 per cent oversubscribed and the international tranche 1,560 per cent, a filing showed.
Strongest start since 2021
Hong Kong has logged its strongest start to a year since 2021, with initial public offerings and second listings raising about US$5.5 billion in January, the most since US$7.6 billion was raised in January 2021, London Stock Exchange Group data showed.
The recent offerings and upcoming debuts include Muyuan, printed circuit board equipment maker Shenzhen Han’s CNC Technology, and chipmakers Montage Technology and Axera Semiconductor.
Founded in Shenzhen in 1994, Eastroc also exports to countries in South-east Asia such as Vietnam and Malaysia.
A major functional beverage company, it said in its prospectus that its market share in China grew from 15 per cent in 2021 to 26.3 per cent in 2024, citing consultancy firm Frost & Sullivan.
Functional beverages are drinks formulated with added ingredients such as electrolytes or vitamins, and are usually marketed for benefits such as energy replenishment or hydration.
Its revenue in the nine months ended September rose 34 per cent to 16.8 billion yuan (S$3.1 billion) from the same period a year before, while net profit jumped 38.7 per cent to 3.8 billion yuan.
Cornerstone investors include Qatar Investment Authority, Temasek, True Light Capital, BlackRock, Tencent and HongShan Capital.
Huatai International, Morgan Stanley and UBS are the sponsors. REUTERS
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