It is so boring.
In the early morning of April 40, 2020, Nongfu Spring submitted the pre-disclosure documents for listing to the Hong Kong Stock Exchange, which meant that Nongfu Spring, a leading packaged drinking water and beverage enterprise in China and the brand with the largest market share of packaged drinking water in China, officially launched the IPO in Hong Kong. The company's main products include packaged drinking water and beverage supplies (tea drinks, juice drinks, etc. ). The contribution of packaged drinking water to the company's main income has steadily increased; Among the beverage categories, farmer's orchard, water-soluble C 100, and screaming sports beverage are the big single products that have been in business for more than 10 years.
According to the prospectus, the gross profit margin of the company in 20 19 was 55.4%, and the gross profit margin of packaged drinking water with revenue accounting for 59.7% was as high as 60.5%. The gross profit margin level far exceeds that of domestic companies in the same industry, and it is equivalent to the global leading companies such as Pepsi (20 19 gross profit margin of 55. 1%), Coca-Cola (20 19 gross profit margin of 60.8%) and Monster Beverage (20 19 gross profit margin of 56.0%).
So what did Nongfu Spring do right, so that the company can enjoy such a high gross profit margin? We will analyze the company's sales cost and find out the reasons behind its high gross profit.
The sales cost of Nongfu Spring mainly includes (i) the cost of raw materials, including the cost of PET, sugar and fruit juice; (ii) The cost of packaging materials includes the cost of cartons, labels, shrink films, etc. (iii) manufacturing costs and (iv) labor remuneration.
As can be seen from the above table, raw materials and packaging materials used to produce products are the largest components of the company's sales cost, and the total cost of raw materials and packaging materials in 20 17, 20 18 and 20 19 years accounted for 74.4%, 75.2% and 74.9% of the sales cost respectively.