First Half-Year Report Shows Net Profit Decrease of 20% to 30%! Huarun Beverage "Takes a Tumble", Distributors Reveal "Price Inversion" Inside Story, Facing Competition from Nongfu Springs and Other Rivals

By | BUG Column, Xu Yuanlei

After listing on the Hong Kong Stock Exchange in October last year, Huarun Beverage has released its first half-year report with a net profit warning, expecting a decrease of 20% to 30%. The company's stock price plummeted sharply after the announcement.

Huarun Beverage is currently undergoing a transformation. According to a distributor, many distributors are facing "price inversion" issues, where they can only recoup 90-95% of their costs from sales, and Huarun Beverage needs to provide subsidies to maintain the system.

The company's chairman, Zhang Weiting, received a salary of 227 million yuan in 2024, a decrease of 48% from the previous year. The main reason is the reduction in performance-related bonuses.

Net Profit Warning, Distributors Reveal Concerns

The company's chairman explained that the main reason for the decrease in net profit was the increase in marketing expenses, which led to a higher marketing expense rate.

Some distributors revealed that Huarun Beverage has increased its marketing investment this year, including sponsorship of sports events and online marketing campaigns. The company's chairman believes that this strategy will drive growth in the long term.

According to Li Yingtao, a partner at Jiaxi Consultancy, Huarun Beverage needs to focus on innovation and build a "core product + blockbuster + long-tail combination" matrix. The company should also strengthen its brand recognition as a diversified beverage group.

This year, Huarun Beverage has launched over ten new products in various categories, including bottled water, sports drinks, herbal tea, and instant coffee. The company will continue to expand its product lineup in the future.

Source: Sina News