(Bloomberg News) Zong Qinghou,
head of China’s third-largest beverage maker, is the country’s richest
man after disclosing his stake in closely held Hangzhou Wahaha Group Co.
is more than double previous estimates.
The
66-year-old soda and juice tycoon owns more than 80 percent of Wahaha,
the company’s spokesman Shan Qining said in an interview on Sept. 3.
That stake elevates Zong’s net worth to $21.6 billion, according to the
Bloomberg Billionaires Index. He is now $13.4 billion wealthier than
Robin Li, founder of the nation’s biggest search engine.
Zong, a
chain-smoking member of the Chinese legislature who says he spends just
$20 a day, ranks No. 23 globally and trails only Li Ka-Shing and Mukesh
Ambani in Asia. Baidu Inc. Chairman Li’s net worth has dropped 3.8
percent year-to-date.
Wahaha has
benefited from decades of rapid economic growth in China. The company
has about 60 factories in 29 provinces across the country, making soda,
food and baby formula, as well as children’s apparel, its website shows.
“Zong has
made himself a billionaire by staying in the right industry, positioning
Wahaha well and eventually seizing the opportunity of growth in smaller
Chinese cities,” said Zhang Lu, an analyst at Capital Securities Corp.
in Shanghai. “Given the fact that Wahaha is already a well-known brand
domestically, disclosing his share and wealth would help to boost the
global profile of both Wahaha and Zong himself.”
‘Laughing Children’
Zong founded
Wahaha, which means “laughing children” in Chinese, 25 years ago with
two retired teachers and a $22,048 loan. It has a 7.2 percent share of
China’s soft drink market, according to London-based researcher
Euromonitor International. Coca-Cola dominates with a 16.8 percent
share, followed by Hong Kong-listed Tingyi (Cayman Islands) Holding Co.
In 2011,
Hangzhou, China-based Wahaha generated $11 billion in revenue and $1
billion in profit, Zong said in a March 2012 interview with Bloomberg
News. The closely held operation may boost net income to $1.6 billion in
2012 on sales of $13.3 billion, helped by the Chinese government’s push
to boost domestic consumption, he said.
The beverage
maker’s valuation is derived using the average enterprise
value-to-sales and price-to-earnings multiples of three publicly traded
peers: Tingyi, Hebei Chengde Lolo and China Huiyuan Juice.
Based on an
analysis of dividends, market performance and taxes, Zong has about $1.9
billion in cash and other liquid assets, according to data compiled by
Bloomberg.
Baidu Falters
Baidu’s
stock has declined about 23 percent on the Nasdaq since the end of the
first quarter on concerns the most-popular search engine in China may
face more competition from Qihoo 360 Technology Co., which started a new
search tool on Aug. 16, Barclays analyst Alicia Yap said.
Kaiser Kuo, a Beijing-based spokesman for Baidu, declined to comment.
Zong’s net
worth change shows the opacity of wealth in China, where disclosure
requirements are less transparent than in countries such as the U.S.
The
Bloomberg Billionaires Index takes measure of the world’s wealthiest
people based on market and economic changes and Bloomberg News
reporting. Each net worth figure is updated every business day at 5:30
p.m. in New York and listed in U.S. dollars at current exchange rates.
