WEBVTT 1 00:00:07.540 --> 00:00:12.170 Hello and welcome in this film, which contrary to what its title suggests, 2 00:00:12.470 --> 00:00:17.290 is not dedicated to alchemy or the transmutation of materials of 3 00:00:17.290 --> 00:00:18.030 any kind, 4 00:00:18.030 --> 00:00:23.010 but to known full spring a Chinese company that made the 5 00:00:23.010 --> 00:00:25.770 fortune of its founder and owner. 6 00:00:26.950 --> 00:00:31.210 You could imagine that the richest person in China comes from the tech universe, 7 00:00:31.420 --> 00:00:34.050 which is creating petty of billionaires around the world. 8 00:00:34.790 --> 00:00:39.650 Not exactly the richest person is a leader in mineral 9 00:00:39.650 --> 00:00:44.650 water, which is not exactly what you would qualify as an high tech business. 10 00:00:46.230 --> 00:00:50.770 Of course there's a difference between the wealth of an individual and the value 11 00:00:50.770 --> 00:00:54.330 of the company. If you look at the market capitalization in China, 12 00:00:54.960 --> 00:00:59.370 tech versus water number one, 10 cent, c e o, 13 00:00:59.510 --> 00:01:01.050 pan Ma, very well known, 14 00:01:01.640 --> 00:01:05.850 $400 billion Alibaba, Jack Ma, 15 00:01:06.150 --> 00:01:10.170 $240 billion and long full springing only 16 00:01:10.580 --> 00:01:12.170 $64 billion. 17 00:01:12.990 --> 00:01:17.290 But John Han whose nickname is the lone wolf, 18 00:01:18.130 --> 00:01:22.330 somebody who is quite discreet holds 84%. 19 00:01:23.230 --> 00:01:28.050 So what is very interesting is that known for spring is a fantastic economic and 20 00:01:28.050 --> 00:01:31.850 financial success, quite discreet under the radar, 21 00:01:32.430 --> 00:01:37.210 but this success has been generated by the company without diluting the 22 00:01:37.210 --> 00:01:41.930 founder, owner of the company, which is basically the subject of this film. 23 00:01:43.030 --> 00:01:45.770 If we go back to the valuation of known food springing, 24 00:01:45.870 --> 00:01:49.450 the company is private until September, 2020, 25 00:01:50.050 --> 00:01:52.370 i p o on the Hong Kong stock exchange, 26 00:01:52.960 --> 00:01:55.290 Hong Kong means H shares. 27 00:01:55.490 --> 00:01:59.570 I will elaborate a little bit later on about A versus H shares. 28 00:02:00.110 --> 00:02:05.010 The offered price is 21.5 Hong Kong dollars. The closing price, 29 00:02:05.230 --> 00:02:07.930 the first day of the listing is $35. 30 00:02:09.230 --> 00:02:13.050 Now the company issuing almost 400 million shares, 31 00:02:13.300 --> 00:02:18.010 which represents only 3.5% of the total number of 32 00:02:18.010 --> 00:02:18.850 shares outstanding. 33 00:02:19.270 --> 00:02:23.170 The company is going to raise 8.5 billion Hong Kong dollars, 34 00:02:23.170 --> 00:02:27.690 which represents a little bit more than $1 billion. But interestingly, 35 00:02:27.990 --> 00:02:29.730 the same year in 2020, 36 00:02:30.150 --> 00:02:34.210 the company's going to distribute a dividend of 8 billion Hong Kong dollars. 37 00:02:34.880 --> 00:02:38.490 It's as if the money which comes from the shares issue is distributed. 38 00:02:38.630 --> 00:02:41.370 The shareholders in 2019, 39 00:02:41.470 --> 00:02:46.450 the year before the dividend represented $9.6 billion. 40 00:02:46.510 --> 00:02:50.130 Though you can conclude that at the end of the day the company on a financial 41 00:02:50.130 --> 00:02:52.250 point of view did not need the I P O. 42 00:02:52.960 --> 00:02:55.570 What happened after the I P O first, 43 00:02:55.740 --> 00:03:00.560 there was a fantastic increase in stock price completely correlated from the 44 00:03:00.560 --> 00:03:03.200 market. The Hong is a little bit up, 45 00:03:03.200 --> 00:03:08.160 the non full springing stock price is skyrocketing then back to reality and 46 00:03:08.160 --> 00:03:10.680 what is very interesting, if you look at the last month, 47 00:03:11.380 --> 00:03:13.840 non food springing stock price is quite stable. 48 00:03:14.500 --> 00:03:18.640 Boring I would say when the Hong Index is down 49 00:03:19.350 --> 00:03:21.760 from the very beginning to the end of this period, 50 00:03:21.820 --> 00:03:26.520 if you look at non food break stock prices plus 20% plus 22 51 00:03:26.520 --> 00:03:30.480 exactly, plus the dividend you have to add if you want to calculate the total 52 00:03:30.480 --> 00:03:32.400 shareholders return. In the meantime, 53 00:03:32.500 --> 00:03:35.960 the Hong Index is down by 25%. 54 00:03:36.140 --> 00:03:39.320 So at the end the day it's quite a good story for the non-food spring 55 00:03:39.320 --> 00:03:43.520 shareholders, today's stock price is 44 Hong Kong dollars, 56 00:03:43.730 --> 00:03:48.560 which represents a capitalization of 500 billion Hong Kong 57 00:03:48.560 --> 00:03:53.320 dollars and Mr. Han owes 84% of that, 58 00:03:53.900 --> 00:03:55.000 but that not all. 59 00:03:55.510 --> 00:03:59.240 He's also the controlling interest of a company in the pharma business whose 60 00:03:59.240 --> 00:04:02.840 name is Beijing Onetime biological pharmacy. 61 00:04:03.100 --> 00:04:05.480 He owes 75%. He seems that Mr. 62 00:04:05.860 --> 00:04:10.320 Han enjoys very much keeping the control of the assets plus some other 63 00:04:10.590 --> 00:04:12.680 various mission assets. 64 00:04:13.020 --> 00:04:15.880 At the end of the day is total waste is evaluated at 65 00:04:15.880 --> 00:04:20.080 $62.4 billion according to Forbes, 66 00:04:20.700 --> 00:04:24.760 number one in China, number 20 worldwide. 67 00:04:25.180 --> 00:04:28.520 So he's a very, very wealthy, successful person. 68 00:04:29.720 --> 00:04:34.720 A few words about A versus H shares A means 69 00:04:34.720 --> 00:04:39.680 that the company is listed on the Shanghai or Xang Zhen stock market 70 00:04:40.740 --> 00:04:45.240 and a means that these shares are reserved to mainland citizens, 71 00:04:45.470 --> 00:04:46.680 Chinese citizens, 72 00:04:46.980 --> 00:04:51.320 and to some other investors which are named qualified investors. 73 00:04:52.320 --> 00:04:54.240 H means Hong Kong stock exchange, 74 00:04:54.240 --> 00:04:58.000 it's quite free in terms of access A is very restricted. 75 00:04:58.460 --> 00:05:02.880 Now the qualified foreign institutional investors is a very 76 00:05:02.990 --> 00:05:07.720 restrictive club of foreign investors who are allowed to buy and 77 00:05:07.750 --> 00:05:11.760 sell and trade Asia shares in Shanghai. In Shanghai, 78 00:05:13.040 --> 00:05:17.560 interestingly, I visited the China Securities Regulatory Commission website, 79 00:05:17.810 --> 00:05:20.880 which gives a list of these very selective club. 80 00:05:21.550 --> 00:05:26.440 It's a selective club with more than 550 members in which you can 81 00:05:26.440 --> 00:05:29.000 find the large international banks. 82 00:05:29.780 --> 00:05:33.880 The first one to join the list in 2003 is U B s, 83 00:05:34.100 --> 00:05:37.280 but followed by Goldman Sachs, Morgan Stanley, 84 00:05:37.700 --> 00:05:39.160 all the large banks are there, 85 00:05:40.110 --> 00:05:43.240 obviously asset managers because it's about trading stocks. 86 00:05:43.820 --> 00:05:46.960 The first to join the list is a Japanese company, 87 00:05:47.380 --> 00:05:51.800 no Secur is followed by BlackRock, MDI and so on so forth. 88 00:05:52.380 --> 00:05:56.280 But if you look at the list, there are some interesting names in the others, 89 00:05:57.240 --> 00:05:58.480 a kind of Ivy League, 90 00:05:58.540 --> 00:06:03.400 of course Ivy League is about Northeast American University and here you have 91 00:06:03.400 --> 00:06:07.320 some other universities. But the first one to join the list is Stanford, 92 00:06:08.400 --> 00:06:12.680 followed by Harvard, followed by Princeton, by Duke, and by M I t. 93 00:06:13.380 --> 00:06:16.600 So it's quite interesting because as you know, 94 00:06:16.980 --> 00:06:21.760 the American students have a lot of debt in their own bounties or the debt of 95 00:06:21.760 --> 00:06:26.760 the average American student is in fact used in order to finance the growth 96 00:06:26.900 --> 00:06:31.440 and the investment and the prosperity of large Chinese companies listed in 97 00:06:31.520 --> 00:06:36.480 Shanghai and or in jy in the other others you 98 00:06:36.480 --> 00:06:39.480 have also quite interesting names such as the Mayo Clinic, 99 00:06:40.070 --> 00:06:44.920 very well known in Rochester, New York for the quality of its services. 100 00:06:45.180 --> 00:06:47.000 And you have the Bank of Taiwan, 101 00:06:47.370 --> 00:06:51.640 which is allowed to trade a Asias in Shanghai and Xang jy. 102 00:06:52.380 --> 00:06:56.080 Now let's go back to John Han and Nofo Spring. Mr. 103 00:06:56.500 --> 00:07:01.280 Han was born in 1954 when he is 12 years old 104 00:07:01.460 --> 00:07:05.680 in 1966. The cultural revolution starts in China, 105 00:07:06.090 --> 00:07:08.840 which is going to be an extremely dramatic event, 106 00:07:10.220 --> 00:07:12.360 is somewhere homeless, 107 00:07:12.820 --> 00:07:17.680 moving from one place to the other from the age of 12 to the age of 23. 108 00:07:18.030 --> 00:07:21.920 He's going to work in the construction industry as a mason, 109 00:07:22.220 --> 00:07:24.400 as a carpenter, and so on, so forth. 110 00:07:24.470 --> 00:07:27.280 This period was certainly a traumatic experience for Mr. 111 00:07:28.060 --> 00:07:32.720 Han and this is probably the reason why it is very much out 112 00:07:32.860 --> 00:07:34.400 of publicity, 113 00:07:35.170 --> 00:07:39.840 media TV and the Liqui Communist Party in China 114 00:07:39.930 --> 00:07:41.200 under ruling members. 115 00:07:42.080 --> 00:07:47.040 1977 is 23 years old and now the entrance in 116 00:07:47.040 --> 00:07:48.960 the university is allowed again. 117 00:07:49.550 --> 00:07:52.560 He's going to try and he's going to fail twice. 118 00:07:53.510 --> 00:07:56.280 He's going to be accepted in a community college, 119 00:07:56.290 --> 00:08:01.040 which is a kind of a technical school in order to get a job quite quickly 120 00:08:01.180 --> 00:08:04.280 and he is going to study communication, radio, tv, et cetera, 121 00:08:04.920 --> 00:08:07.080 becoming a journalist. He's being a journalist. 122 00:08:07.080 --> 00:08:12.080 During five years he's been able to observe businesses and he's going to 123 00:08:12.080 --> 00:08:16.360 get into business. He's going to start with a culture of mushroom. 124 00:08:16.540 --> 00:08:20.280 It seems that it was a kind of economic and financial disaster. 125 00:08:20.910 --> 00:08:24.440 Then he became member of the Wahaha community, 126 00:08:25.140 --> 00:08:27.200 Wahaha a company in the food industry, 127 00:08:27.200 --> 00:08:31.920 which is very well known for I would say questionable and dubious 128 00:08:32.360 --> 00:08:36.240 practices in business operations. But he's a number five in water, 129 00:08:36.340 --> 00:08:39.040 so he's going to be knowledgeable in this business. 130 00:08:39.310 --> 00:08:42.160 He's going to be part of the distribution in Hong Joh. 131 00:08:42.950 --> 00:08:47.880 Then he's going to move to kind of pharmacy producer of 132 00:08:48.360 --> 00:08:53.080 erectile dysfunction pills from turtle shell ball. 133 00:08:53.630 --> 00:08:56.240 It's going to be a very big commercial success, 134 00:08:56.340 --> 00:09:01.040 but there will be some issues with the authorities, the health authorities, uh, 135 00:09:01.060 --> 00:09:05.440 who are going to question the efficiency of the product as opposed to what is 136 00:09:05.600 --> 00:09:08.280 promised to the consumer. The big date, 137 00:09:08.480 --> 00:09:10.920 a big moment in his life is 1996. 138 00:09:11.070 --> 00:09:13.520 He's creating non full spring, 139 00:09:13.850 --> 00:09:18.200 which means a farmer's spring and he's going to operate very 140 00:09:18.250 --> 00:09:20.040 discreetly under the radar, 141 00:09:20.610 --> 00:09:25.560 quite different behavior from Jack Ma who is going to publicly give his 142 00:09:25.560 --> 00:09:30.400 opinion about how China is ruled by a number of people with some negative 143 00:09:30.400 --> 00:09:32.680 consequences. As you know now, 144 00:09:32.680 --> 00:09:37.000 it's going to be a fantastic commercial success because non fu springing is 145 00:09:37.390 --> 00:09:42.320 China's biggest selling bottle water company with 146 00:09:42.320 --> 00:09:47.120 12% of the market share and volume followed by a Chinese competitor with a 147 00:09:47.120 --> 00:09:49.840 little bit more than 10, et cetera, et cetera. 148 00:09:50.420 --> 00:09:55.240 Wahaha number five followed by big three international 149 00:09:55.260 --> 00:10:00.160 brands, Dan CocaCola, Dee and Slate, et cetera, 150 00:10:00.340 --> 00:10:02.120 et cetera. So it's very successful. 151 00:10:02.470 --> 00:10:06.480 Initially the success comes from the fact that it's spring water and not 152 00:10:07.040 --> 00:10:09.000 chemically purified water. 153 00:10:09.800 --> 00:10:14.080 A very interesting interview made by the Financial Times is 154 00:10:14.370 --> 00:10:16.600 disclosing what somebody says, 155 00:10:17.280 --> 00:10:19.400 I don't trust tap water. 156 00:10:19.650 --> 00:10:24.560 There is a very big security safety problem in the food and 157 00:10:24.560 --> 00:10:27.720 water in China, and so this gentleman says, 158 00:10:28.240 --> 00:10:31.960 I use half a bottle each and every day just for brushing teeth, 159 00:10:32.960 --> 00:10:37.400 a bottle for cooking for the kitchen, and four bottles for drinking. 160 00:10:38.180 --> 00:10:42.840 No tap water at all. I don't trust tap water. Now, 161 00:10:42.840 --> 00:10:47.440 what is characterizing the operations That non-food spray is very 162 00:10:47.870 --> 00:10:52.160 high performing industrial tool capacity production, 163 00:10:52.620 --> 00:10:54.120 supply chain distribution, 164 00:10:54.390 --> 00:10:58.960 extremely efficient and which is supporting a fantastic brand 165 00:10:59.240 --> 00:11:03.240 positioning nature health. It's natural on health, 166 00:11:03.290 --> 00:11:08.080 which is explained in the website of the company with statements like 167 00:11:08.410 --> 00:11:11.840 every drop of non full springing has its source. 168 00:11:12.300 --> 00:11:15.400 The closer to source, the better water we gain. 169 00:11:15.620 --> 00:11:18.840 You can see on the website fantastic marketing, 170 00:11:19.270 --> 00:11:21.360 very aggressive communication as well. 171 00:11:21.780 --> 00:11:25.920 In 2000 is going to launch a TV campaign 172 00:11:26.400 --> 00:11:28.920 demonstrating between quotes at spring, 173 00:11:28.920 --> 00:11:33.440 water is much better for planned growth and animal health 174 00:11:34.020 --> 00:11:38.240 and is going to very much criticize its competitors and there will be some 175 00:11:38.680 --> 00:11:42.360 difficulties with the competitors is going to be brought in front of the court 176 00:11:42.500 --> 00:11:46.520 and they will have to pay a fine for malicious competition, 177 00:11:47.180 --> 00:11:49.880 unfair disclosure and communication, et cetera. 178 00:11:50.700 --> 00:11:54.160 And at that time he's going to say, but you know, know it's normal business. 179 00:11:54.340 --> 00:11:59.240 The Pepsi Challenge was something quite interesting to observe. Uh, 180 00:11:59.300 --> 00:12:02.640 you film somebody in the street, you said to this person, Hey, 181 00:12:02.980 --> 00:12:06.760 do you drink coca or do you drink Pepsi? I'm a Coca fan. 182 00:12:06.880 --> 00:12:10.000 I will never change and so on. Okay, let's make a blind test. 183 00:12:10.000 --> 00:12:13.800 Do you prefer this one or this one? The person is testing the two and says, 184 00:12:14.280 --> 00:12:18.440 I prefer this one. Then you disclose this is Pepsi. Ah, what's a surprise? 185 00:12:18.540 --> 00:12:20.840 You produce sports at the TV and so on and so forth. 186 00:12:21.190 --> 00:12:26.040 What was not exactly explained that the Pepsi was very, very fresh, 187 00:12:26.470 --> 00:12:27.800 high and so on and so forth. 188 00:12:27.860 --> 00:12:32.560 The temperature was high outside and a Coke was not that 189 00:12:32.560 --> 00:12:33.220 fresh. 190 00:12:33.220 --> 00:12:38.120 So obviously people preferred Pepsi because it was much cooler than Coca, 191 00:12:38.680 --> 00:12:43.480 A bit unfair, but basically John Chan says, we're allowed to do that. 192 00:12:43.590 --> 00:12:47.840 It's normal business practice at the end of the day, it created a brand. 193 00:12:48.620 --> 00:12:53.080 The brand is based on three pillars. First, food security, 194 00:12:53.720 --> 00:12:56.240 a very, very big concern. Low price. 195 00:12:56.700 --> 00:13:00.840 Low price means that it's accessible to everybody and you are not concerned 196 00:13:00.840 --> 00:13:03.600 about using bottled water to brush your teeth. 197 00:13:04.900 --> 00:13:09.840 The last pillar is high production and distribution efficiency. 198 00:13:09.940 --> 00:13:11.640 The company is very good. 199 00:13:12.380 --> 00:13:15.960 Now a brand has a value as you know, each and every year. 200 00:13:15.960 --> 00:13:20.200 Inter brand produces a list of the 100 most valuable brands. 201 00:13:20.500 --> 00:13:22.160 No full springing is not part of the list, 202 00:13:22.940 --> 00:13:26.320 but the brand joined the list produced by K, 203 00:13:26.820 --> 00:13:28.720 the very well-known marketing firm, 204 00:13:29.660 --> 00:13:32.360 number one for K Apple 205 00:13:32.890 --> 00:13:36.560 $880 billion, absolutely fantastic. 206 00:13:37.150 --> 00:13:39.960 Then you have the brands by category of business. 207 00:13:40.220 --> 00:13:42.600 One category is food and beverage. 208 00:13:42.860 --> 00:13:46.760 Number one is CocaCola for the food and beverage with 209 00:13:46.760 --> 00:13:48.280 $106 billion, 210 00:13:48.930 --> 00:13:53.800 which puts CocaCola at the 10th rank in the total list and 211 00:13:54.060 --> 00:13:58.800 FU spraying is number A one in the list with $22 billion, 212 00:13:59.410 --> 00:14:03.400 which is about one third of the market value of the company. 213 00:14:03.940 --> 00:14:08.720 Now let me say again that non spray is a real economic and financial 214 00:14:08.720 --> 00:14:12.600 success, economic success, commercial success. First, 215 00:14:12.700 --> 00:14:15.320 if you look at the evolution of revenues over the last five years, 216 00:14:15.820 --> 00:14:20.280 the company doubled its revenues from about 17 billion revenue 217 00:14:21.300 --> 00:14:26.120 to 33, 30 4 billion. If you exclude 2020, 218 00:14:26.130 --> 00:14:29.640 which is a very specific year because of the pandemic, 219 00:14:30.260 --> 00:14:33.200 the annual growth is about 15% on the average. 220 00:14:33.270 --> 00:14:36.600 Sometimes it's a bit more recovery in 2021. 221 00:14:37.100 --> 00:14:39.520 So you have a huge potential for growth. 222 00:14:40.060 --> 00:14:43.040 The company is operating four different segments, 223 00:14:43.220 --> 00:14:47.840 but by far the largest one is water products. Number two, 224 00:14:48.560 --> 00:14:53.440 interestingly is ready to drink tea products and if you look at the 225 00:14:53.440 --> 00:14:56.600 evolution, this is a green line on the graph, 226 00:14:57.220 --> 00:14:59.960 you see that it's up and significantly up. 227 00:15:00.340 --> 00:15:04.480 For the others it's still quite marginal, but it's growing as well. 228 00:15:05.120 --> 00:15:05.820 Historically, 229 00:15:05.820 --> 00:15:10.760 the water products we representing 60% of the total revenues the 230 00:15:10.760 --> 00:15:14.600 last two years it's a bit down and H 1 20 23, 231 00:15:15.040 --> 00:15:19.640 I will tell you a little bit later it's about 15% of the revenues quite big. 232 00:15:19.940 --> 00:15:24.840 But if you look at the evolution of the relative percentage of T 233 00:15:24.840 --> 00:15:29.480 product is getting up and up 20% at the end of 2022, 234 00:15:29.670 --> 00:15:34.000 more than 25% first semester, 2023. 235 00:15:34.430 --> 00:15:38.160 Operating costs as a percentage to revenues are quite stable. 236 00:15:38.990 --> 00:15:43.480 Cost of sales from 40 to 45 depending more or less on energy cost. 237 00:15:43.860 --> 00:15:47.760 If you look at selling distribution expenses, it's about 25%. 238 00:15:48.440 --> 00:15:50.880 A little bit of economies of scale but extremely marginal, 239 00:15:50.970 --> 00:15:54.040 quite stable general and administrative expenses, 240 00:15:54.470 --> 00:15:59.200 5% straight though it looks like very predictable 241 00:15:59.260 --> 00:16:03.560 in terms of cost structure. At BM a day with 40, 242 00:16:03.560 --> 00:16:08.400 45% cost sales and five plus 25 OPAC 243 00:16:08.520 --> 00:16:11.160 indirect cost, the EBIT dies quite high. 244 00:16:11.750 --> 00:16:16.560 EBIT D is before the precision of the authorization and represents 30% 245 00:16:16.580 --> 00:16:21.520 to revenues for the juice beverage products which are vitamin product for 246 00:16:21.860 --> 00:16:26.800 people who are practicing sport and it is more than 40% for the other three 247 00:16:26.800 --> 00:16:31.480 segments. Tea and water is more than 40% ebitda, 248 00:16:31.570 --> 00:16:34.880 which is absolutely huge in terms of commercial profitability. 249 00:16:35.380 --> 00:16:39.560 So at the end of the day, the camp is EBITDA was 30% five years ago, 250 00:16:39.560 --> 00:16:44.360 it's now about 40%. In the meantime, the company double its revenues, 251 00:16:44.460 --> 00:16:47.960 so it's not growth at the expense of commercial profitability, 252 00:16:48.390 --> 00:16:52.160 it's growth and commercial profitability in parallel. 253 00:16:53.150 --> 00:16:56.680 This is about the ebitda. If you look at the ebit, 254 00:16:57.310 --> 00:17:00.280 that is the difference. That is the precision and multi. 255 00:17:00.670 --> 00:17:04.680 This is a consequence of investing in capacity and so and so forth. 256 00:17:05.070 --> 00:17:09.200 It's about eight to 10% of revenues depending on, 257 00:17:09.460 --> 00:17:12.800 and so at the end of the day, 40% is ebitda, 258 00:17:13.020 --> 00:17:15.680 30% plus is ebit. 259 00:17:16.020 --> 00:17:19.880 So a company extremely profitable in terms of p and a. 260 00:17:20.060 --> 00:17:23.080 You have growth and you have commercial profitability, 261 00:17:23.820 --> 00:17:26.360 but you know that performance is not return on sales. 262 00:17:26.360 --> 00:17:28.760 Performance is return on capital, 263 00:17:29.210 --> 00:17:33.440 which takes into account the assets turnover, the productivity of the asset. 264 00:17:34.060 --> 00:17:38.320 The productivity of the asset is the ability of the company to transform, uh, 265 00:17:38.840 --> 00:17:39.920 tangible, intangible, 266 00:17:40.110 --> 00:17:44.040 non-current assets and working counter requirement into revenues. 267 00:17:44.690 --> 00:17:48.760 Let's have a look at investment property, plant and equipment. 268 00:17:48.820 --> 00:17:53.680 The company invest each and every year from 10 to 12% of its 269 00:17:53.680 --> 00:17:58.320 revenues, which is quite high and the company is naturally depreciating. 270 00:17:58.740 --> 00:18:02.160 Its fixed asset depreciation and monetization, 271 00:18:02.450 --> 00:18:04.560 eight 10% of revenues. 272 00:18:04.860 --> 00:18:08.960 But at the end of the day you add 12 and you deduct 10. 273 00:18:09.140 --> 00:18:14.080 So property, plant and equipment is moving up but not that quickly. 274 00:18:14.540 --> 00:18:15.373 In the meantime, 275 00:18:16.060 --> 00:18:20.680 the company is perfectly managing its operations so that the cash conversion 276 00:18:20.690 --> 00:18:23.040 cycle is strongly negative. 277 00:18:23.040 --> 00:18:25.520 And here you have something very interesting to observe. 278 00:18:25.740 --> 00:18:28.400 Of course a company has inventories, it's normal. 279 00:18:28.940 --> 00:18:32.440 Of course a company is paying its suppliers with a delayed accounts people, 280 00:18:32.740 --> 00:18:34.880 but if you look at the accounts receivable, 281 00:18:35.020 --> 00:18:40.000 it represents five days of sales. So the wholesalers, 282 00:18:40.100 --> 00:18:43.160 the distributors of any kind, they pay very quickly. 283 00:18:43.630 --> 00:18:45.160 It's even better than that. 284 00:18:45.230 --> 00:18:50.200 They pay in advance and the company has a strong link with its distributors. 285 00:18:50.820 --> 00:18:54.640 But the consequence of this link and this contractual partnership with the 286 00:18:54.800 --> 00:18:58.680 distributors is that they pay advances. You receive advances from the customer. 287 00:18:58.820 --> 00:19:02.920 So at the end of the day, the cash conversion cycle is quite negative, 288 00:19:03.850 --> 00:19:08.160 which is a curiosity for a company which is not in distribution but which is in 289 00:19:08.170 --> 00:19:09.920 production. General speaking, 290 00:19:09.940 --> 00:19:14.640 the working capital requirement is negative for retail and positive for 291 00:19:14.960 --> 00:19:15.880 producers here, 292 00:19:16.260 --> 00:19:20.520 the working capital requirement is strongly negative and is producing 293 00:19:21.110 --> 00:19:24.320 some cash resources. So interestingly, 294 00:19:24.320 --> 00:19:28.880 when the capital is growing at 15% and when the cash 295 00:19:28.880 --> 00:19:32.920 conversion cycle represents minus 20 days of sales, 296 00:19:33.750 --> 00:19:38.360 it's like if the working capital requirement is producing cash, 297 00:19:38.870 --> 00:19:42.280 15% of 20, which is three days of revenues, 298 00:19:42.420 --> 00:19:44.440 of additional cash each and every year, 299 00:19:44.530 --> 00:19:49.080 which contributes to the financing of the property plant and equipment which is 300 00:19:49.080 --> 00:19:53.520 not growing at the speed of light. So at the end of the day, 301 00:19:53.780 --> 00:19:57.120 the relationships with the distributors are absolutely phenomenal. 302 00:19:58.150 --> 00:20:02.240 They have strong links and they have kind of win-win partnership with revenue 303 00:20:02.350 --> 00:20:05.800 sharing practices of course, but at the end of the day, 304 00:20:06.060 --> 00:20:10.360 the company is receiving for 2.7 billion revenues advances 305 00:20:11.140 --> 00:20:14.640 and the company also shows operating liabilities in the penalty, 306 00:20:15.160 --> 00:20:17.240 discounts on rebate due to customers, 307 00:20:17.280 --> 00:20:21.400 an additional 1.1 billion and as a company is investing a lot, 308 00:20:21.420 --> 00:20:25.040 but paying with a delay payables on investment 309 00:20:25.500 --> 00:20:29.720 1.5 billion, the working character is extremely negative, 310 00:20:29.810 --> 00:20:32.840 which contributes to the financing. Now the consequence, 311 00:20:32.840 --> 00:20:37.600 the assets turnover is quite high. It's even better than high. It's improving. 312 00:20:38.550 --> 00:20:41.600 Five years ago the assets turnover was 2.5. 313 00:20:41.930 --> 00:20:43.600 Today it's about 4.5. 314 00:20:44.150 --> 00:20:47.390 Then return capital is return on sales times assets done over. 315 00:20:47.390 --> 00:20:49.080 When you multiply 30%, 316 00:20:49.490 --> 00:20:53.360 which is a very nice p and l by 4.5, 317 00:20:53.570 --> 00:20:55.600 which is a very nice balance aid, 318 00:20:55.980 --> 00:21:00.480 you get a return capital employed of 135%, 319 00:21:00.650 --> 00:21:04.120 which is absolutely outstanding. On financial point of view, 320 00:21:05.220 --> 00:21:09.640 of course there is a kind of correlation between performance return capital and 321 00:21:09.640 --> 00:21:13.160 value creation because performance is what creates value. 322 00:21:14.020 --> 00:21:18.000 But if you look at the market to book of the company during the last three years 323 00:21:18.260 --> 00:21:22.000 of listing 20 to 22, it's more than 60, 324 00:21:23.370 --> 00:21:27.760 which basically means that one MIB invested in business operations had a value, 325 00:21:27.760 --> 00:21:30.000 which is more than 60 MIB is today. 326 00:21:30.510 --> 00:21:34.200 This fantastic value creation seems to be quite correlated with their 327 00:21:34.270 --> 00:21:39.000 outstanding financial performance. But when you evaluate a company, 328 00:21:39.530 --> 00:21:43.560 there is performance in it because performance is what is creating value, 329 00:21:43.860 --> 00:21:48.560 but growth is boosting and accelerating performance to create value. 330 00:21:48.940 --> 00:21:53.760 So it's interesting to calculate the growth which is consistent with that 331 00:21:53.810 --> 00:21:55.960 value and the performance of the company. 332 00:21:56.700 --> 00:22:01.640 You can calculate the kind of theoretical market to book as if there was no 333 00:22:01.640 --> 00:22:04.720 growth in the free cash flows, revenues had been done whatsoever. 334 00:22:05.030 --> 00:22:09.600 Then you compare this market to book without growth with the actual market to 335 00:22:09.600 --> 00:22:11.520 book. And the intensity, 336 00:22:11.900 --> 00:22:16.640 if I may say of the gap gives you a kind of idea about the level of growth which 337 00:22:16.640 --> 00:22:20.640 is anticipated by financial investors. At the end of the time, 338 00:22:21.180 --> 00:22:24.680 the market to book without any growth should be 20. 339 00:22:25.460 --> 00:22:30.440 The actual market to book is more than 60. Then you understand that the market, 340 00:22:30.620 --> 00:22:34.920 the financial investors are anticipating a huge growth potential in 341 00:22:35.360 --> 00:22:38.320 revenues, in profits and in cash labs. 342 00:22:39.020 --> 00:22:43.680 Now it's very interesting to observe that the growth which you need during the 343 00:22:43.680 --> 00:22:48.360 next 10 years is 14% for the free cash 344 00:22:48.370 --> 00:22:52.280 flows each and every year, 14% during 10 years. 345 00:22:52.500 --> 00:22:56.440 That's quite big and it raises two phenomenal questions. 346 00:22:57.180 --> 00:22:58.000 The first one is, 347 00:22:58.000 --> 00:23:03.000 does a company have the growth drivers to keep on growing at the 348 00:23:03.000 --> 00:23:05.320 same rate? You remember it was about 15%. 349 00:23:05.900 --> 00:23:09.280 The second question is also quite interesting. When you grow, 350 00:23:09.500 --> 00:23:13.320 you consume financial resources, you need financial resources. 351 00:23:13.510 --> 00:23:16.960 Will a company be able to finance its growth? 352 00:23:17.780 --> 00:23:21.000 You remember what is at stake is the dilution of the owner. 353 00:23:21.730 --> 00:23:23.440 Let's first have a look at growth drivers. 354 00:23:24.180 --> 00:23:28.760 Of course in 2020 the business is a bit stable. 2022, 355 00:23:28.870 --> 00:23:33.080 it's a bit up and 2023, first semester, 23%. 356 00:23:33.980 --> 00:23:35.840 Wow. In the meantime, in China, 357 00:23:36.400 --> 00:23:39.120 G D P is growing at a level of 5.5%. 358 00:23:39.430 --> 00:23:42.880 Household consumption is uh, by 8.2%, 359 00:23:43.180 --> 00:23:47.200 and if you look at the different segments, water is 12%. Ah, 360 00:23:47.200 --> 00:23:50.520 12 is not 14 or 15 or whatsoever. Yes, 361 00:23:51.020 --> 00:23:55.920 but tea products are uh by 60% and the others juice 362 00:23:56.280 --> 00:23:58.840 beverages and so on and so forth. 20 to 30%. 363 00:23:58.940 --> 00:24:03.760 So you have the gross drivers and the first one is tea, 364 00:24:04.010 --> 00:24:05.640 ready to drink tea product. 365 00:24:06.970 --> 00:24:09.320 Let's have a look now at gross financing. 366 00:24:09.970 --> 00:24:13.760 Gross consumes financial resources. This is absolutely obvious why? 367 00:24:13.790 --> 00:24:17.480 Because the day you grow, you have to increase your production capacity, 368 00:24:17.480 --> 00:24:21.200 your manufacturing footprint, you remember 10 to 12%. 369 00:24:22.220 --> 00:24:25.560 You have also to take into account the working capital requirement. Ah, 370 00:24:25.710 --> 00:24:26.390 good news, 371 00:24:26.390 --> 00:24:30.920 it's strongly negatives and gross is producing cash and not consuming cash. 372 00:24:31.340 --> 00:24:36.320 The question is, is it durable? Is it enduring? Is it stable in the long term? 373 00:24:36.590 --> 00:24:41.280 That might be a question and the day you want to promote an increase 374 00:24:41.460 --> 00:24:45.880 growth rate of the other product, you have to invest in marketing, in promotion, 375 00:24:45.900 --> 00:24:49.240 in innovation and so on, so forth. So the question is, 376 00:24:49.620 --> 00:24:53.400 is your p and l going to be as stable as anticipated? 377 00:24:54.140 --> 00:24:54.820 Now in finance, 378 00:24:54.820 --> 00:24:59.360 we have a nice concept to explain the ability of the company to grow and to sell 379 00:24:59.400 --> 00:25:02.560 finances. Growth is name sustainable growth. 380 00:25:03.770 --> 00:25:05.200 Let's go back to this concept. 381 00:25:06.100 --> 00:25:10.840 The very big question is does a company have a capacity to finance his growth? 382 00:25:11.340 --> 00:25:15.000 Of course, you can't find on your growth. You raise debt, you raise equity, 383 00:25:15.180 --> 00:25:17.000 you issue shares and so on so forth. 384 00:25:17.300 --> 00:25:22.040 But the question is you want to finance your growth without diluting your 385 00:25:22.040 --> 00:25:22.700 shareholders. 386 00:25:22.700 --> 00:25:27.560 You remember that John Chan holds 84% of non 387 00:25:27.560 --> 00:25:29.840 full springing and he wants to keep the control. 388 00:25:30.620 --> 00:25:33.560 So you try to finance your growth without suing shares. 389 00:25:33.660 --> 00:25:36.680 And then if you don't want to dilute your shareholders, 390 00:25:36.710 --> 00:25:40.560 your profit should be high because if you don't want to deteriorate your 391 00:25:40.560 --> 00:25:42.520 financial structure increasing debt, 392 00:25:42.740 --> 00:25:46.200 and if you want to keep debt over equity quite constant, 393 00:25:46.750 --> 00:25:50.640 then you need to generate plenty of profit or you can increase debt, 394 00:25:51.060 --> 00:25:55.360 but then you increase very much a financial risk and you put a company in a very 395 00:25:55.720 --> 00:25:56.553 dangerous situation. 396 00:25:56.820 --> 00:26:01.200 The three words which are quite important is you want to finance 397 00:26:01.540 --> 00:26:05.480 growth and you want to kind of self-financing. 398 00:26:05.620 --> 00:26:10.280 It should come from inside this equity increase so that you can keep 399 00:26:10.470 --> 00:26:15.280 your financial independence and you're not forced to issue shares each 400 00:26:15.280 --> 00:26:20.000 and every day. The definition, technical definition of sustainable growth, 401 00:26:20.100 --> 00:26:25.040 it is a maximum growth rate of capital employment that the 402 00:26:25.040 --> 00:26:28.680 company can assume and sustain without issuing shares, 403 00:26:28.680 --> 00:26:32.320 again dilution and without increasing the debt ratio, 404 00:26:32.320 --> 00:26:37.040 without increasing the gearing debt divided by equity. Now, 405 00:26:37.040 --> 00:26:39.320 in this definition, there are two phenomenal points. 406 00:26:39.830 --> 00:26:41.520 It's not gross in the revenues, 407 00:26:42.020 --> 00:26:46.400 in the growth of the capital employed for a very simple reason. 408 00:26:46.940 --> 00:26:51.440 You remember that shareholders and bankers, they don't finance the revenues. 409 00:26:51.830 --> 00:26:56.280 They finance industrial operations thanks to which you can produce and generate 410 00:26:56.360 --> 00:27:00.920 revenues though basically the what is at stake is a growth in 411 00:27:01.220 --> 00:27:04.400 is how much we invest in the development of your capital employee, 412 00:27:05.330 --> 00:27:06.600 which has a consequence, 413 00:27:06.600 --> 00:27:11.440 which is you can produce and you generate more revenues. This is first point. 414 00:27:11.440 --> 00:27:15.040 The second point is it's about internal financing. 415 00:27:15.460 --> 00:27:17.680 If it's about internal financing for equity, 416 00:27:17.980 --> 00:27:22.120 it means that it's about profitability and functional performance. 417 00:27:22.700 --> 00:27:25.840 How do you calculate the sustainable growth rate? Ah, 418 00:27:26.180 --> 00:27:29.480 you want to increase your equity. You have two ways to increase your equity. 419 00:27:29.860 --> 00:27:33.360 You can increase your retain earnings or you can issue shares capital increase. 420 00:27:33.380 --> 00:27:35.760 No, it should be zero. We don't want to issue shares. 421 00:27:35.760 --> 00:27:40.280 So the increase in equity is limited to increasing retain earnings, 422 00:27:40.690 --> 00:27:44.800 which is about an net earnings of the year minus dividends which are returned 423 00:27:44.800 --> 00:27:45.760 back to shareholders. 424 00:27:47.270 --> 00:27:51.200 Very important ratio which characterizes the dividend policy of the company 425 00:27:51.760 --> 00:27:52.600 dividend pout, 426 00:27:52.820 --> 00:27:57.360 the rate of distribution D is dividend divided by an net earnings. 427 00:27:57.360 --> 00:28:00.920 Which percentage of your net earnings you return to shareholders. 428 00:28:01.900 --> 00:28:04.880 So the increase in retail earnings is net earnings, 429 00:28:05.760 --> 00:28:09.920 earnings after taxes minus D multiplied by earnings after taxes, 430 00:28:10.020 --> 00:28:14.800 so it's earnings after taxes multiplied by open the bracket one minus D 431 00:28:15.050 --> 00:28:15.960 close bracket. 432 00:28:17.430 --> 00:28:22.400 Then the equity growth rate is the equity increase 433 00:28:22.470 --> 00:28:27.320 divided by the equity. So it's increase in return earnings divided by equity, 434 00:28:27.390 --> 00:28:32.360 it's earnings after tax multiplied by one minus D divided by equity, 435 00:28:33.340 --> 00:28:37.680 no problem. But earning such tax divided by equity is very well known. 436 00:28:38.390 --> 00:28:43.080 It's how much you earn as a shareholder divided by how much you invested as a 437 00:28:43.080 --> 00:28:45.400 shareholder. It's a return on shareholders' investment. 438 00:28:45.710 --> 00:28:48.800 It's a financial profitability, it's a return on equity. 439 00:28:49.700 --> 00:28:54.320 So you understand that the internal growth of equity without pursuing shares 440 00:28:54.320 --> 00:28:59.040 again is return equity multiplied by one minus dividend payout 441 00:28:59.090 --> 00:29:02.720 ratio. If you want to keep a stable financial structure, 442 00:29:03.510 --> 00:29:08.400 debt should grow at the same rate as equity. Then debt over equity is constant, 443 00:29:09.180 --> 00:29:12.160 but if debt is growing at the same rate as equity, 444 00:29:12.460 --> 00:29:15.760 you understand that capital employee should grow at the same rate. 445 00:29:15.910 --> 00:29:20.360 Otherwise you have an issue in the gross financing. So the self-finance, 446 00:29:20.380 --> 00:29:25.160 the sustainable growth rate is named G S and it's 447 00:29:25.160 --> 00:29:29.600 return equity multiplied by one minus dividend power ratio. 448 00:29:30.490 --> 00:29:32.520 Let's calculate it for non footprint. 449 00:29:33.020 --> 00:29:37.440 And then you have to observe the dividend policy of the company. Interestingly, 450 00:29:37.500 --> 00:29:41.760 the company before it's listed was distributing a fantastic dividend. 451 00:29:42.340 --> 00:29:46.160 It was distributing more than 150% of the earnings of the year. 452 00:29:46.580 --> 00:29:50.440 So you take dividend divided by the earnings of the year and you get something 453 00:29:50.440 --> 00:29:54.720 which is very high stabilization in 21, 22, 454 00:29:55.370 --> 00:29:59.840 about 50%. But the company says, we make no commitment, 455 00:29:59.980 --> 00:30:03.760 we provide no commitment on the distribution policy of the company. 456 00:30:04.450 --> 00:30:06.880 There will be a can of commitment, 457 00:30:06.880 --> 00:30:09.640 which is the ability to sell financial growth. 458 00:30:10.460 --> 00:30:12.440 And then if you calculate the return equity, 459 00:30:12.460 --> 00:30:16.400 you get something like 35 40% and 460 00:30:16.400 --> 00:30:20.720 35% minus 50% gives you a very nice 461 00:30:20.870 --> 00:30:25.520 sustainable growth rate. It was a bit more than 20% in 2021. 462 00:30:25.980 --> 00:30:29.440 It is a bit less than 20% in 2022. 463 00:30:29.620 --> 00:30:33.040 But then you have to compare the sustainable growth rate, 464 00:30:33.040 --> 00:30:36.240 which is the ability of the company to sell finances, 465 00:30:36.240 --> 00:30:40.240 growth with the actual capital employee growth and the capital employed for the 466 00:30:40.240 --> 00:30:44.760 reasons which I gave you before, increasing property, plant and equipment. 467 00:30:45.020 --> 00:30:45.610 But uh, 468 00:30:45.610 --> 00:30:50.440 investment minus the precision and negative working capital requirement 469 00:30:50.620 --> 00:30:54.160 and cash conversion cycle. The capital employees almost stable, 470 00:30:54.210 --> 00:30:59.160 which is quite outstanding for a company which is growing its revenues by 471 00:30:59.160 --> 00:30:59.993 15%. 472 00:31:00.500 --> 00:31:05.080 So you have stable capital employee growth and you have a strong ability to grow 473 00:31:05.420 --> 00:31:08.080 at the end of the day, no problem in the financing. 474 00:31:09.020 --> 00:31:12.240 No problem in the financing and the company can't distribute a lot of dividend. 475 00:31:12.340 --> 00:31:15.040 Why? Because it's cash rich. 476 00:31:15.750 --> 00:31:18.840 Cash by far exceeds debt in the balancing. 477 00:31:19.180 --> 00:31:20.840 The gearing is negative. 478 00:31:21.070 --> 00:31:25.800 Debt over equity debt is about minus 70% of equity. 479 00:31:26.100 --> 00:31:30.160 The leverage debt divided by EBITDA is strongly negative. 480 00:31:31.140 --> 00:31:34.560 In fact, cash represents one year Fitbit done to make it simple. 481 00:31:35.020 --> 00:31:36.000 So at the end of the day, 482 00:31:36.000 --> 00:31:40.720 you have a company whose financial structure is extremely robust, 483 00:31:41.330 --> 00:31:43.880 whose ability to grow is very high, 484 00:31:44.780 --> 00:31:48.280 and with growth in the capital employees quite controlled. 485 00:31:49.490 --> 00:31:53.320 Which information do we get from the first half? 2023 growth? 486 00:31:53.500 --> 00:31:57.560 23% net income plus 25%, 487 00:31:58.140 --> 00:32:02.440 and the company announces that they are going to pay a dividend of 7.6 billion 488 00:32:02.550 --> 00:32:06.920 rent. Maybe if you look at the earnings of last year, 489 00:32:06.990 --> 00:32:07.840 general speaking, 490 00:32:07.840 --> 00:32:11.440 the dividend of this year is a consequence of the dividend of last year. 491 00:32:11.620 --> 00:32:15.840 It represents about 60% of the earnings after tax of 2022. 492 00:32:16.690 --> 00:32:19.160 Let's apply the ratio to the return equity, 493 00:32:19.260 --> 00:32:23.560 35% but applied by one minus D one minus 60%, 494 00:32:23.770 --> 00:32:27.080 40% of 35% is 14%. 495 00:32:27.270 --> 00:32:31.280 This is a sustainable growth rate and you remember that the value of the company 496 00:32:31.420 --> 00:32:33.880 is justified by an annual increase, 497 00:32:34.020 --> 00:32:38.400 an annual increase in the free cash flow of 14%. Same figure, 498 00:32:39.010 --> 00:32:39.880 quite harmony. 499 00:32:40.700 --> 00:32:45.640 The challenges which are going to be met by the company in the futures are first 500 00:32:45.850 --> 00:32:50.160 commercial challenges per you growth in a T 501 00:32:50.660 --> 00:32:53.800 in order of course and others and so on and so forth. 502 00:32:53.940 --> 00:32:57.000 You have to keep on growing your revenues. 503 00:32:57.460 --> 00:33:00.800 You can read some marketing comments and statements, 504 00:33:00.860 --> 00:33:03.760 say that the company should premiumize its water, 505 00:33:04.200 --> 00:33:08.080 increase the prices to make it simple luxury things and so on so forth. 506 00:33:08.740 --> 00:33:13.640 I'm not quite sure that it'll not have a depositioning consequence on 507 00:33:13.640 --> 00:33:16.680 the brand. In addition to the commercial challenges, 508 00:33:16.690 --> 00:33:21.080 there will be a financial challenge the company wants to keep on investing in 509 00:33:21.080 --> 00:33:23.320 it. Growth free cash load. 510 00:33:23.830 --> 00:33:26.280 What about the evolution of the working capital requirement? 511 00:33:26.390 --> 00:33:30.640 Investing in capacity manufacturing footprint and operating expenses. 512 00:33:30.640 --> 00:33:31.880 Because if you want to grow, 513 00:33:31.910 --> 00:33:36.680 sometimes you have to invest in marketing development expenses, 514 00:33:36.980 --> 00:33:41.760 but in my opinion, there will be also a third category of challenges, 515 00:33:41.760 --> 00:33:44.120 which is quite big. Societal challenges. 516 00:33:44.860 --> 00:33:48.360 The company was working under the radar. Nobody knows you, 517 00:33:48.360 --> 00:33:51.160 you can do whatever you like, no consequence, 518 00:33:51.820 --> 00:33:56.320 and nobody is looking at observing and criticizing what you do. 519 00:33:56.540 --> 00:33:58.280 Now the company is visible. 520 00:33:59.230 --> 00:34:03.720 Everybody in China was caught by a surprise understanding that the number one, 521 00:34:03.780 --> 00:34:07.120 the richest person in China now is producing mineral water. 522 00:34:07.900 --> 00:34:12.720 Now they are very interesting statements on social networks saying for 523 00:34:12.720 --> 00:34:13.320 example, oh, 524 00:34:13.320 --> 00:34:18.200 you produce Jewish beverage on peaches and the peaches come from 525 00:34:18.590 --> 00:34:19.960 Fukushima. Ah, okay, 526 00:34:20.180 --> 00:34:25.040 so maybe there is a problem somewhere because you heard about nuclear accident 527 00:34:25.100 --> 00:34:28.600 on Fukushima. Is there any consequence? Nobody knows, 528 00:34:28.600 --> 00:34:31.680 but everybody's criticizing on that statement. 529 00:34:32.030 --> 00:34:34.560 When you produce and sell some mineral water, 530 00:34:34.820 --> 00:34:39.520 you sell it in bottles poly ET to after that 531 00:34:40.200 --> 00:34:43.840 b e t. That's something which comes from carbon. 532 00:34:44.390 --> 00:34:47.040 It's something which comes from oil products. 533 00:34:47.040 --> 00:34:52.000 It's about chemical product and there will be some pollution here and 534 00:34:52.000 --> 00:34:54.160 there because you have to store, because et cetera, 535 00:34:54.160 --> 00:34:58.320 because you have to produce some scope three upstream 536 00:34:58.880 --> 00:35:01.840 purchases, uh, about your, about your production, 537 00:35:01.840 --> 00:35:04.800 and the company communicates very much on scope one, scope two, 538 00:35:04.900 --> 00:35:08.600 not very much on scope three downstream, no problem. 539 00:35:08.660 --> 00:35:13.640 You drink the water upstream problem because you have to produce the bottles and 540 00:35:13.640 --> 00:35:14.920 there will be major, 541 00:35:15.210 --> 00:35:20.200 major challenges and this is why the question is if you are so 542 00:35:20.210 --> 00:35:23.920 profitable, if you can't distribute a dividend in 2020, 543 00:35:24.010 --> 00:35:25.240 which is uh, 544 00:35:25.410 --> 00:35:29.360 about what you raised from the capital market without deteriorating the bounty, 545 00:35:30.020 --> 00:35:33.760 why list the company now? He's no more under the radar. 546 00:35:34.180 --> 00:35:36.960 He is in front of the screen. Everybody's observing. 547 00:35:37.540 --> 00:35:42.040 That's an additional challenge for the company. Thank you very much.