Eastroc Beverage shares traded flat in their Hong Kong trading debut on Tuesday, after the Chinese energy drinks producer raised HK$10.14 billion ($1.3 billion) in a share sale.
The shares opened at HK$248 each, same as their offer price of HK$248 that gives Eastroc a market capitalisation of around HK$166.39 billion. They rose as much as HK$249.80 and declined to as low HK$246.80 before trading at around HK$248.
The share sale marks the second-largest in the city so far this year after the offering by China’s biggest pig breeder, Muyuan Foods, which aims to raise $1.4 billion and will debut on Friday.
Shanghai-listed Eastroc sold 40.9 million shares in the listing at the top end of its marketed range.
The retail portion of the sale was 57.46 times oversubscribed and the international tranche 15.60 times, according to the company’s allotment results announcement on Monday.
The company plans to use the proceeds for production capacity expansions and supply chain upgrades, brand building, overseas growth and potential investments and acquisitions, according to its prospectus.
Kenny Ng, securities strategist at China Everbright Securities International, said investor enthusiasm in Hong Kong listings has historically leaned toward new economy, smart manufacturing and technology firms due to their stronger growth prospects.
“In contrast, stocks from traditional economic sectors, such as Eastroc, often exhibit more stable trends following their listing,” he added.
Eastroc’s listing comes as Hong Kong attracts a steady stream of Chinese consumer, food and technology firms.
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 manufactures and distributes beverages in China and since 2023 has exported its products to markets including countries in Southeast Asia, such as Vietnam and Malaysia.
It has been the largest functional beverage company in China in terms of sales volume for four consecutive years since 2021, with market share increasing from 15% in 2021 to 26.3% in 2024, its prospectus showed, 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.
Revenue in the nine months ended September 30 last year rose 34% to 16.84 billion yuan ($2.43 billion) from 12.55 billion yuan the same period a year ago, while net profit jumped 38.7% to 3.76 billion yuan from 2.71 billion yuan.
Cornerstone investors include Qatar Investment Authority, Temasek Holdings, True Light Capital, BlackRock, Tencent, and HongShan Capital, according to its prospectus.
Huatai International, Morgan Stanley and UBS are the sponsors.
Reuters
