Can Eastroc Become China's Coca-Cola?

The Shenzhen-based company is rapidly developing beyond its original energy drink focus, as it continued to post strong growth in the first half of this year

Key Takeaways:

• Eastroc has filed a second Hong Kong IPO application, after its original one lapsed, showing its sales rose 37% in the first half of this year
• A billion-dollar listing could help the beverage maker fund new production bases as it expands beyond its original energy drink focus

In 2017, Eastroc Beverage (Group) Co Ltd. (605499.SH) was largely confined to its home base in South China's Guangdong province, where it started as a state-owned enterprise in 1994. Fast forward to the present, when, under its current private ownership, it has served up its signature drinks across China and is taking baby steps into overseas markets in Indonesia, Vietnam and Malaysia.

Now, the company is aiming to serve up its stock to thirsty Hong Kong investors who seem eager to purchase just about anything in one of the city's best IPO markets in years. Despite its old-economy background, the company could attract strong interest for its rapid growth story as it expands both geographically beyond China, and also into new beverage areas beyond its original energy drink focus.

The company's stock is already listed across the border in Shanghai, and the new application would follow a recent trend for globally minded Chinese companies already listed in Shanghai and Shenzhen to make second IPOs targeting more international investors in Hong Kong.

As of June, Eastroc had engaged with over 250 million customers, had 4.2 million points of sale and 3,200 distribution partners, according to its new listing document filed last week, its second such filing after its original application in April lapsed. The company has hired heavy-hitting underwriters for the listing, including Huatai International, Morgan Stanley and UBS, with earlier reports indicating it could raise up to $1 billion. Some of that would go to building new production bases, including one on South China's Hainan island, which broke ground in April, aimed at serving the company's small but growing global operation.

Eastroc has also been expanding its four existing production bases and begun construction of three new ones, with an eighth being planned. Its overall production capacity of 4.9 million tons last year, with an 89.5% utilization rate, is already up sharply from 2.8 million tons in 2022. The company expects its current works in progress, including 5.9 billion in new investment, to lift its total capacity to 12 million tons per year, according to the prospectus.

Holders of Eastroc's Shanghai-listed shares seemed unimpressed with the latest Hong Kong listing application. After rising by 2.5% in the two days after the announcement last week, the stock gave back all those gains and more over the next trading days.

That could be because the company previously released its first-half financials to the Shanghai Stock Exchange. What's more, Hong Kong IPO investors already have many other choices, as the red-hot market is on track to outrank the New York Stock Exchange and Nasdaq in new listings this year. A total of 66 companies raised $23.27 billion on Hong Kong Stock Exchange through the end of September, with six IPOs raising over $1 billion.

Strong performer

Eastroc has been a strong performer since its Shanghai listing in May 2021, with its stock increasing in value by nearly six times since then, giving it a market cap of 151 billion yuan ($21.2 billion) and a frothy price-to-earnings (P/E) ratio of 38. It is the only domestically listed beverage company valued at over 100 billion yuan, and for most of its history was focused on energy drinks, most notably a homegrown cheaper alternative to the globally renowned Red Bull.

According to independent research in its prospectus, Eastroc has now bulldozed the original Red Bull to become China's leading energy drink purveyor. Its marketing strategy positions its drinks between the more premium-focused Red Bull, with its heavy focus on sports sponsorships, and number-three player Dali Food Group's Hi-Tiger, which focuses on low price and sponsorship of local sports events.

Eastroc's sales nearly doubled from 8.5 billion yuan in 2022 to 15.8 billion yuan last year. That made it the fastest growing among the top 20 publicly listed Chinese soft beverage companies last year in a market worth 1.3 trillion yuan. Eastroc's profit rose at an even faster rate from 1.4 billion to 3.3 billion yuan in 2024, as its net profit margin rose from 16.9% to 21%. Its revenue and profit continued to grow strongly in the first half of this year, both rising about 36%.

The company mentions Vietnam and Malaysia as overseas markets where its products are currently sold, but notes that China still accounted for the vast majority 99.8% of its revenue in the first half of this year.

Eastroc has climbed up the rankings by focusing on China's smaller cities as well as offline channels. But its most recent success has come from its pursuit of hydration sports drinks, a sub-branch of its "functional beverage" focus. Such drinks, under its Eastroc Water Boost brand, made their debut in 2023 and nearly quadrupled in sales between that year and 2024, and then nearly tripled year-on-year in the first half of 2025. That lifted their contribution from 9.4% of total revenue in 2024 and 13.9% in the first six months of 2025.

Such sports drinks are aimed at a different demographic than energy drinks, which are favored by factory workers and students seeking a boost to overcome fatigue from working long hours. By comparison, sports drinks target athletes and e-sports users. Eastroc has yet to catch up with more established names like Danone's (BN.PA) Mizone and Coke's (KO.US) Powerade, but seems to be making steady progress.

Eastroc has also been diversifying into the healthy drink category, listed in its prospectus as "other beverage products." The contribution of that segment rose from 6.7% of revenue in 2024 to 8.2% in the first half of this year, coming from brands like Shangcha Superior Tea, Tea of Fruits, Quench & Nourish, Coffee Master, Coco Island and Amla Juice. 

"We all know of beverage brands that have found success with either going deep into just one core product like Monster, or with going broad into multiple product development such as Coca-Cola and Nongfu Spring," Eastroc director Viv Jiang told FoodNavigator Asia in an interview at an industry event last September. Jiang added that Eastroc had tried both approaches and decided to go with the broader multi-category route.

That raises the question of whether Eastroc could someday become China's answer to Coke. It still seems like a dream, as Coca Cola's global reach, its $287.5 billion market cap and $47 billion in sales last year dwarf Eastroc's figures. But Chinese mythology includes the story of a giant fish called Kun that can transform into a giant bird called Peng, capable of flying vast distances. Perhaps Eastroc might do the same.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.