---
title: "Nongfu Spring Prepares for IPO? Or Is It Extremely Short of Money..."
description: "Nongfu Spring was rumored to be preparing for an IPO, but the company denied it, calling it routine coaching. However, insiders suggest the company may need significant funds for strategic moves, including deploying 100,000 self-service vending machines and other initiatives."
author: "阿茹汗  李珂"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-08-07"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/nongfu-spring-prepares-for-ipo-or-is-it-extremely-short-of-money-73677dda/"
markdown: "https://xinjignxiao.com/en/articles/nongfu-spring-prepares-for-ipo-or-is-it-extremely-short-of-money-73677dda.md"
original_source: "https://mp.weixin.qq.com/s/_fmZ7OiQVLf04dJWOEbjYw"
translation: "https://xinjignxiao.com/zh/articles/%E5%86%9C%E5%A4%AB%E5%B1%B1%E6%B3%89%E5%87%86%E5%A4%87%E4%B8%8A%E5%B8%82ipo-%E6%88%96%E5%9B%A0%E6%9E%81%E5%BA%A6%E7%BC%BA%E9%92%B1-73677dda.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/nongfu-spring-prepares-for-ipo-or-is-it-extremely-short-of-money-73677dda/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Nongfu Spring Prepares for IPO? Or Is It Extremely Short of Money...

> Nongfu Spring was rumored to be preparing for an IPO, but the company denied it, calling it routine coaching. However, insiders suggest the company may need significant funds for strategic moves, including deploying 100,000 self-service vending machines and other initiatives.

Click to read the original article for details
1. Nongfu Spring rumored for IPO, officially denied
Yesterday, the news that Nongfu Spring was about to go public flooded the朋友圈 of FMCG professionals.
The news originated from a notice issued by the Zhejiang Regulatory Bureau of the China Securities Regulatory Commission (CSRC) stating that Nongfu Spring Co., Ltd. (hereinafter referred to as "Nongfu Spring") was receiving coaching from CITIC Securities, sparking market speculation about Nongfu Spring's listing. However, on the same day, Nongfu Spring's board secretary Zhou Li responded to reporters that it was routine coaching and there was no listing plan.
The report from the Zhejiang Regulatory Bureau showed that CITIC Securities, as the coaching institution for Nongfu Spring's initial public offering of A-shares, was carrying out coaching work. The personnel receiving coaching this time included Nongfu Spring's actual controllers, all directors (including independent directors), supervisors, senior management, and representatives of legal person shareholders and natural persons holding 5% or more shares.
The coaching content included learning or training on regulatory knowledge, and the coaching team communicated with management on the company's business development, future development plans, and public opinion. Next, CITIC Securities would continue to focus on Nongfu Spring's new project investment and other aspects for further coaching.
Nongfu Spring has been producing bottled water since 1996 and has become a leading enterprise in the drinking water industry, with products including packaged drinking water, tea, juice, functional drinks, and fresh fruit.
Earlier this year, Zhejiang Business Magazine released the "2018 Top 500 Zhejiang Enterprises List," in which Nongfu Spring's performance was disclosed for the first time. The company's revenue in 2017 reached 16.25 billion yuan, a year-on-year increase of 8.3%. From 2013 to 2016, the company's revenues were 9 billion, 9.09 billion, 12.6 billion, and 15 billion yuan, respectively.
Recently, another giant in the packaged drinking water industry, China Resources C'estbon, also announced its 2017 performance: last year, the company's revenue exceeded 12.6 billion yuan, with a growth rate of nearly 10%, higher than the industry's 8%, and a market share of over 19%, rising to second place in the industry. "In 2017, China Resources C'estbon's sales volume grew by more than 15% year-on-year, higher than the overall industry level, with sales share increasing by 0.4 percentage points, maintaining second place and further widening the gap with the third place," C'estbon said.
From the above data, Nongfu Spring's position as the industry leader is undisputed, and its revenue growth last year was in line with the industry, slightly lower than C'estbon.
In fact, with the improvement of people's health awareness, the market position of the drinking water industry is continuously rising. Public data shows that in 2016, the main business revenue of packaged drinking water products was 135.404 billion yuan, a year-on-year increase of 5.9%, accounting for 21.06% of the beverage industry. Brands such as Nongfu Spring, C'estbon, Master Kong, Ganten, Wahaha, and Ice Dew have occupied 80% of the market share, and industry concentration is increasing.
In interviews with reporters, several drinking water industry insiders believed that as the differences between products of various companies become increasingly blurred, competition in the industry has entered a white-hot stage. Previously, companies competed on water sources, prices, positioning, channels, and marketing. Although companies still have their own characteristics, the differences in these dimensions have become less obvious. "For example, in product positioning, companies are starting to cover various price points; in channels, they are also opening up omni-channel distribution," said an anonymous water company insider.
In his view, Nongfu Spring's acceptance of pre-IPO coaching is also to standardize its own management and prepare for a future listing, which would mean having stronger strength to expand the market.
Nongfu Spring, however, denied the listing plan. In fact, speculation about Nongfu Spring's listing has been ongoing. At the end of last year, Nongfu Spring's chairman and general manager Zhong Shanshan said, "There is no capital need now, so there is no need to go public."
However, it is worth noting that according to data published by Zhejiang Business Magazine, Nongfu Spring's revenue growth has slowed in recent years. After a high growth rate of 38.6% in 2015, it achieved a year-on-year growth of 19% in 2016, and by 2017, it was 8.3% year-on-year.
2. Big ambitions require big capital
A source familiar with the matter said that the reason for the IPO is that Nongfu Spring may launch a series of "big moves" that will generate huge capital needs. This... in short, isn't it just a lack of money?
A financial insider told FMCG reporters that since the CSRC disclosed the pre-IPO coaching news, it indicates that "the possibility of the company starting the IPO process is extremely high."
Another insider revealed to FMCG reporters that Nongfu Spring will have a series of strategic initiatives that require large amounts of capital, and in this context, Nongfu Spring has sufficient motivation to go public.
After all, nothing is faster than raising funds.
He also revealed that Nongfu Spring is deploying 100,000 courier-cabinet-style self-service machines nationwide, which will be placed in residential garage areas, elevator lobbies, and other locations; at 40,000 yuan per unit, this alone would require 4 billion yuan in funds.
FMCG reporters also learned that Nongfu Spring will have a major move in another sector (Yang Sheng Tang) and may need large amounts of capital. The aforementioned insider said, "Once this starts, it will still be short of money."
FMCG reporters immediately sought confirmation from Zhou Li, but Zhou Li said, "Both are not true; there are no such plans."
Even so, over the years, Nongfu Spring's "ambition" is as clear as day.
It has spared no effort in its diversification path: crossing into agriculture to grow oranges, Nongfu Spring "spent ten years and narrowly escaped death" and finally succeeded in fresh fruit and cold chain; crossing into skincare to make masks, 160,000 boxes were sold out within minutes of launch.
As for the two projects denied by Zhou Li, sources say one is already underway, and the other will naturally yield results in time.
3. Real kung fu or fake moves?
Of course, there are other voices regarding Nongfu Spring's listing. For example, Nongfu Spring has never stopped "coaching" for ten years, which might be a "practice"?
"It cannot be ruled out that they are using pre-IPO coaching to improve internal corporate governance, and the long-term coaching without an actual IPO may indicate that there are internal issues that are not suitable for public disclosure and have not been well resolved," said Shen Meng, executive director of Chanson Capital.
This view was echoed by another industry insider, who said that Nongfu Spring may want to strengthen its own management and standardization through pre-IPO coaching to prepare for a real listing.
Although Nongfu Spring officially stated it has no listing plans, the story of being "forced to list" is not uncommon.
In March 2017, some media reported that Nongfu Spring might go public, and provided a list of companies in the Zhejiang jurisdiction that were in the coaching period for listing, with Nongfu Spring prominently listed. But soon, this news was refuted by Nongfu Spring's official response, with Zhou Li personally stating that there was no listing plan, "just an old story."
In November 2017, the capital market rumored that Nongfu Spring would backdoor list via "George White (002687)". After the news spread, the stock price of Zhejiang George White Clothing Co., Ltd. saw cumulative closing price increases exceeding 20% over several consecutive trading days... On the evening of November 9, George White issued an announcement denying the backdoor listing rumors.
In fact, as early as around 2000, rumors about Nongfu Spring's listing began to circulate. However, with repeated disappointments, many industry insiders, even former employees, began to believe that Nongfu Spring did not need to go public.
"If it goes public, it will face many restrictions. Too many constraints, not in line with his (Zhong Shanshan's) personality. FMCG companies have ample cash flow and don't need to go public," said a former Yang Sheng Tang employee.
There is also a view that "Nongfu Spring's success requires Zhong Shanshan's 'autocracy' as a guarantee." Once listed and financed, Zhong Shanshan's authority within Nongfu Spring will inevitably be influenced by shareholders. This may not be a good thing for either Zhong Shanshan himself or Nongfu Spring.
But this time, will Nongfu Spring go public, and does it really lack money?
Source: Compiled from Economic Observer Online and FMCG
-END-


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671