New Stock Preview | Coconut water sold $158 million in a year, deciphering the "business experience" of Thai food and beverage leader IFBH.

Recently, the secondary market has never lacked "fresh news" - a food and beverage leader originating from Thailand and earning in China actually went public in Hong Kong. On April 9th, according to the Hong Kong Stock Exchange, the parent company of the coconut water brand IF, IFBH Limited (hereinafter referred to as "IFBH"), submitted an application for listing on the Hong Kong Stock Exchange and plans to list on the main board of Hong Kong. CITIC SEC will act as the exclusive sponsor. This IPO will be another milestone event in the global coconut water industry after Vita Coco's listing in the United States. It is reported that IFBH is a Thailand-based ready-to-drink beverage and ready-to-eat food company. The company's core product is coconut-based beverages, with its main brands being if and Innococo. The if brand has quickly established a leading position in the mainland Chinese market since its establishment in 2013, and has gradually expanded to global markets. The Innococo brand was launched in 2022, combining electrolyte water with coconut water to enter the sports beverage track, becoming the fastest growing product line. As a Thai company, more than 90% of IFBH's revenue comes from the mainland Chinese market in 2024. In terms of market share, IFBH is still the largest company in the coconut water beverage market in mainland China. It can be seen that IFBH has already made a mark in the Chinese food and beverage industry, but what about its investment value in the secondary market? Originating from Thailand, thriving in China In recent years, with the increasing demand from Chinese consumers for natural beverages, the market for coconut water, as a low-sugar, electrolyte-rich health drink, has shown significant growth. IFBH, with its selling points of "100% natural coconut water," has accurately captured this trend and become an international coconut water brand. According to the report from Zou Shi Consulting, in the mainland Chinese market, the company has been the leader in the coconut water beverage market for five consecutive years since 2020, with a market share of approximately 34% in 2024, more than seven times that of its second largest competitor. In the Hong Kong market, IFBH has been the leader for nine consecutive years since 2016, with a market share of 60% in 2024. Globally, IFBH is the second largest coconut water beverage company in 2024. With precise market positioning and a considerable industry position, the revenue and profit of IFBH are also showing rapid growth trends. In 2024, IFBH achieved revenue of $158 million, an 80.3% year-on-year increase; net profit of $33.16 million, a 98.9% increase year-on-year, and the net profit margin increased from 19.2% in 2023 to 21.1%. At the same time, the company's gross profit margin continued to improve, increasing from 34.7% in 2023 to 36.7% in 2024, even higher than the 35.3% of Kangshifu Beverage Sector. The growth of revenue and profit has also driven the growth of cash flow. According to the prospectus data, as of 2024, the company's net cash flow from operating activities reached $41.753 million, an increase of 55% year-on-year; and the cash and cash equivalents at the end of the period reached $54.818 million, a 251.42% increase year-on-year. Regarding the significant growth in cash flow, the company stated in the prospectus that it was mainly due to the improvement in profitability, which benefited from the company's continuous promotion of business growth through a light asset model. It is reported that IFBH mainly adopts a light asset operating model, with only 46 employees, achieving light asset operation through OEM production and third-party distribution, with per capita revenue exceeding 25 million yuan in 2024, leading globally in efficiency. This model significantly reduces operating costs and frees up profit space. However, it should be noted that IFBH also has obvious limitations in terms of its product structure and over-reliance on the Chinese market for development. Specifically, 95.6% of IFBH's revenue depends on coconut water, with new product categories (such as plant-based snacks) accounting for less than 1%, indicating weak risk resistance. If the growth rate of the coconut water market slows down or competition intensifies, it may affect the sustainability of growth. At the same time, in 2024, IFBH's revenue in the mainland Chinese market was $146 million, an 82.3% increase year-on-year, accounting for 92.4% of the total revenue in 2024. During the same period, IFBH's revenue in the Hong Kong market accounted for 4.6%, as an international food and beverage brand, the growth limitation brought by over-reliance on the Chinese market undoubtedly poses certain limitations on the company's future development. Food and beverage track is competitive, how should foreign brands proceed? It must be said that the reason why IFBH has rapidly risen in the Chinese coconut water beverage industry is mainly due to the fact that this track is a fertile land that urgently needs to be developed. According to Zou Shi Consulting report, from 2019 to 2024, the global coconut water beverage industry has shown significant growth, with the market size increasing from $2.517 billion to $4.989 billion, a compound annual growth rate of 14.7%. It is estimated that in the next five years, the industry will grow at a compound annual growth rate of 11.1%, reaching $8.457 billion in 2029. During this period, the coconut water beverage industry in Greater China has expanded significantly, with the market size increasing from $102 million in 2019 to $1.093 billion in 2024, a compound annual growth rate of 60.8%. In particular, the market size in mainland China increased from $49.7 million in 2019 to $1.018 billion in 2024, with a compound annual growth rate of 82.9%, and is expected to reach $2.55 billion in 2029. According to the report, the forecast growth of the coconut water beverage market in mainland China is mainly driven by factors such as the improvement of consumer health awareness, distribution channels, and expansion of consumer groups. However, for IFBH, this is also a development track where opportunities and challenges coexist. On the one hand, the company also faces obvious market competition and price war pressures. In recent years, a large number of brands have entered the coconut water track, including Vita Coco, Yotsuba, KokoFullScore, and other domestic and foreign players, leading to serious homogenization of products. Data from the Tmall platform shows that although IFBH is priced lower than Vita Coco (if price is about 5.2 yuan/350ml), retailers such as Hema have launched 1-liter products for only 9.9 yuan, compressing profit margins. On the other handRegarding IFBH, there are still risks of supply chain dependence and fluctuations in raw material prices. It is understood that IFBH's coconut water raw materials are completely dependent on suppliers from Thailand, and in recent years, the high temperatures and drought in Southeast Asia have led to a decrease in coconut production, with the price of young coconuts rising by over 70% by 2024. Although there are plans to introduce suppliers from multiple countries to reduce risks, the short-term stability of the supply chain still presents hidden dangers.In this regard, IFBH also proposed several plans in the prospectus: for example, diversifying the supply chain, reducing the proportion of raw material suppliers from Thailand to below 70% by 2025, expanding into other production areas in Southeast Asia; further expanding the market, using IPO funds to strengthen warehouse and logistics capabilities, and entering new markets such as Australia and the Americas; and continuing to innovate products, developing more healthy drinks and snacks, reducing reliance on coconut water. In conclusion, although IFBH holds a dominant position in the Chinese market due to its first-mover advantage and brand effect, and has certain investment value, in the long term, the company may still need to break through its reliance on a single product category and supply chain bottlenecks in order to sustainably attract interest from secondary market investors.