Listed for One Year, Performance "Changes Face": China Resources Beverage Net Profit Declines 40%

(Source: Damo Finance)

Produced by Damo Finance

In its second year of listing, the performance of CR Beverage, the parent company of Yibao, has taken a turn for the worse.

On March 12, CR Beverage’s stock opened lower and briefly hit a new low for the period during trading. By the close, the stock price fell 0.20% to HKD 10.03 per share, with a total market value of about HKD 24 billion. Compared to the high of HKD 16.12 per share (pre-adjusted) at the time of listing, the current stock price has dropped nearly 40%.

Behind the decline in stock price, CR Beverage released a profit forecast for 2025 on the evening before. The company expects net profit attributable to shareholders to decrease by approximately 40% compared to 2024.

CR Beverage’s net profit attributable to shareholders in 2024 was about RMB 1.637 billion. Based on this, the 2025 net profit is estimated to be around RMB 1 billion. In the first half of 2025, the company’s net profit attributable to shareholders was RMB 805 million, meaning that in the second half, net profit is expected to be only about RMB 200 million.

Before its listing, CR Beverage’s performance was consistently strong. From 2022 to 2024, net profit attributable to shareholders grew steadily, with increases of 15.34%, 34.3%, and 23.12%, respectively. The stock price trend also reflects that the “performance turnaround” has had a significant impact on the company.

CR Beverage stated that the sharp decline in performance was influenced by increased marketing investments, product structure adjustments, and channel reforms. Additionally, the bottled water business continued to face pressure, and the beverage segment’s growth was below expectations, which also affected overall performance.

As an important subsidiary of China Resources Group in the consumer sector, CR Beverage’s flagship brand Yibao is a well-known bottled water brand domestically. However, in recent years, the company has faced increasing competition, from industry leader Nongfu Spring to traditional domestic brands like Wahaha, all striving to expand their market share. In this fierce competition, Yibao’s market share has been under continuous pressure, dragging down CR Beverage’s overall performance.

Amid the performance decline, CR Beverage completed a leadership change in January this year. Zhang Weitong, a veteran with over 20 years of experience at the company, announced his resignation as Chairman of the Board, and Gao Li, with a background in finance, took over the position.

To boost shareholder confidence, CR Beverage announced a dividend plan on the same day as the earnings forecast. The company will distribute no less than 90% of net profit attributable to shareholders as dividends in 2025. This ratio is higher than in 2024, when the company paid out RMB 1.158 billion, about 70% of that year’s net profit.

Yibao Under Pressure

Yibao, CR Beverage’s core brand, has long accounted for over 80% of the company’s total revenue from bottled water.

However, in recent years, competition in the pure water segment where Yibao operates has intensified. In 2024, Nongfu Spring, which mainly focuses on mineral water, launched a green bottle product to enter the pure water market, with prices dropping to around RMB 1. Meanwhile, brands like Wahaha, Master Kong, and Jing Tian (the parent company of Baisuishan) also engaged in price wars.

According to third-party platform Ma Shang Ying Data, during this price war, Wahaha showed rapid growth, while Nongfu Spring, affected by public opinion issues, has stabilized since March 2025. Yibao’s market share, however, has been eroded. From March to October 2025, Yibao’s market share in packaged water declined year-over-year each month.

Company performance also supports this trend. In the first half of 2025, Nongfu Spring’s revenue from bottled water grew by 10.7% year-over-year, returning to double-digit growth. During the November 2025 sales meeting, Wahaha’s General Manager Xu Simin stated that amid turbulent times, they maintained steady progress, achieving RMB 500 million in revenue growth.

CR Beverage’s bottled water business, however, is declining. In 2024, revenue from this segment fell about 2.6% year-over-year, and in the first half of 2025, the decline widened to 23.1%.

Facing pressure in the bottled water segment, CR Beverage is trying to boost growth through its beverage business. In the first half of 2025, the company launched 14 new beverage products, including the Jinqingrun series and honey water series. During this period, revenue from beverages reached RMB 955 million, up 21.3% year-over-year, accounting for 15.4% of total revenue, an increase of 5.1 percentage points from the previous year.

However, the beverage industry is also becoming increasingly competitive, and CR Beverage lacks well-known sub-brands like Yibao, limiting its competitiveness. The company also indicated in its earnings forecast that the growth of its beverage segment in 2025 did not meet expectations.

To improve performance, CR Beverage has made strategic adjustments. The forecast shows increased marketing efforts, product restructuring, and channel reforms in 2025.

Additionally, CR Beverage continues to expand its own production capacity to improve gross profit margins. Previously, much of its capacity was outsourced to contract manufacturers, resulting in lower margins compared to industry leaders. In the first half of 2025, the company’s gross margin was 46.7%, while Nongfu Spring’s was 60.3%.

In recent years, CR Beverage has been expanding its production lines. The financial report indicates that the Wuyishan large-pack bottled water production line was put into operation in Q1 2025, with plans to add two more factories in the second half. The self-built Zhejiang factory is expected to start production in Q4 2025. The company already has four self-operated factories for beverages.

Management Changes

Amid declining performance, CR Beverage completed a leadership change in January this year. Former Chairman Zhang Weitong resigned due to work needs, and Gao Li, with a background in finance, took over as Chairman. In February, the company’s former CFO Wu Xia also announced his resignation.

Zhang Weitong, a veteran in sales at CR Beverage, joined the company in 2000 and held roles including regional sales manager, department manager, assistant to the general manager, deputy general manager, and senior vice president. Since 2018, he has been responsible for overall operations, serving as President and Chairman of the Board.

At the June 2024 shareholder meeting, CR Beverage re-elected Zhang Weitong as an executive director and continued to serve as Chairman until his departure in January 2025, only seven months later.

After Zhang’s departure, Gao Li became the new Chairman. Gao Li is 53 years old and joined China Resources Group in 2007. He has nearly 10 years of experience at CR Beverage, including serving as CFO from 2012 to 2020. Since 2020, he has held roles such as Deputy General Manager of the Finance Department at China Resources Group and CFO of China Resources Power. Since January last year, he has been General Manager of the Finance Department at China Resources Group.

Given the low gross margins and performance pressures, the leadership change at CR Beverage may also aim to enhance cost control and profitability. However, in the highly competitive water and beverage industry, whether a finance-oriented leader can drive business growth remains to be seen.

Following the leadership change, the CFO position was also replaced. The new CFO, Huang Hu, has a history with CR Beverage, having served as Assistant General Manager and Deputy General Manager of the company’s Finance Department. He also has experience at China Resources Wanfeng and China Resources Building Materials.