New Dairy Industry Seeks Funds in Hong Kong

(Source: Beijing Business Today)

Following Junlebao, the Hong Kong Stock Exchange may welcome its second dairy company to file this year. On the evening of March 11, New Dairy announced that it has officially initiated an IPO in Hong Kong. If successful, New Dairy will become the first domestic dairy company listed in both the “A+H” markets. On March 12, New Dairy faced a cold reception in the capital markets; by the close of trading, its stock price plummeted 9.21%, with a total market value of 15.535 billion yuan.

Three Considerations

Regarding the reasons for listing in Hong Kong, New Dairy mainly cited three strategic considerations in its announcement: advancing its internationalization strategy, building an international capital operation platform, and enhancing the company’s capital strength.

The announcement also indicates that raising funds in Hong Kong is a significant motive. New Dairy stated it will issue no more than 15% of its total share capital after the IPO in H-shares, with an over-allotment option. The funds raised will primarily be used for product upgrades, market expansion, supply chain improvements, technological R&D, digitalization, and company operations.

Looking at New Dairy’s debt situation, listing in Hong Kong could broaden financing channels and facilitate access to more overseas capital. From 2022 to 2024, New Dairy’s total liabilities were 6.825 billion yuan, 6.299 billion yuan, and 5.736 billion yuan, respectively. Its current liabilities were as high as 4.261 billion yuan, 4.018 billion yuan, and 3.731 billion yuan in those years, with asset-liability ratios of 71.91%, 70.47%, and 64.61%, still relatively high.

Senior dairy analyst Song Liang told Beijing Business Today, “Over the past decade, Chinese dairy companies have accelerated supply chain construction, establishing modern breeding and industrial systems. But in recent years, with declining product prices, companies face cash flow shortages, and coupled with industry transformation needs, domestic firms have limited financing options and can only raise funds through listing.”

Shen Meng, Executive Director of Xiang Song Capital, believes, “The purpose of New Dairy issuing H-shares is to raise funds and improve its asset-liability structure. Currently, the enthusiasm for IPOs in Hong Kong is high, which can meet some of the company’s financing needs.”

Tapping Overseas Markets

Given the current state of the domestic dairy industry, New Dairy’s move to initiate an IPO in Hong Kong is also a necessity.

According to Euromonitor data, in 2024, China’s liquid milk industry will reach 344.2 billion yuan, with a compound annual growth rate (CAGR) of 7.2% from 2011 to 2021, but a projected CAGR of -4.2% from 2022 to 2024. NielsenIQ data shows that as of September 2025, the total sales of dairy products across channels in China declined by 16.8% year-on-year.

In recent years, as domestic market competition intensifies, internationalization has become a breakthrough for Chinese dairy companies to solve growth difficulties. For example, Southeast Asia, with nearly 700 million people, has per capita liquid milk consumption generally below 20 kg/year, leaving significant room for growth. Companies like Yili, Mengniu, Feihe, and Junlebao are all expanding into this market.

Previously, New Dairy had disclosed overseas market plans. In June 2025, Vice President Zhang Shuai publicly stated that the company would leverage the global resources of New Hope Group to adopt a “light deployment” strategy, focusing on opportunities in Southeast Asia with a “half-step ahead” approach.

According to reports, New Dairy’s internationalization plan involves three steps: first, achieving a dual-driven model of international trade, expanding from Chinese supermarkets to mainstream local retail channels, and supporting Chinese-style tea chain brands; second, promoting cross-border operations and localized marketing; third, realizing global operations.

Is the Timing Right?

After five years of listing on the A-share market, is now the “best window” for New Dairy to go public in Hong Kong?

China food industry analyst Zhu Danpeng said, “Currently, for Chinese companies, rushing to Hong Kong stocks is the best opportunity. The ‘A+H’ listing benefits from national policy support and consumer market dividends. New Dairy has a certain market share and brand recognition in the low-temperature fresh milk segment.”

In the past, New Dairy mainly expanded rapidly through acquisitions of local dairy companies, quickly becoming a leading national dairy enterprise, and successfully listed on the A-share market in 2019. According to its official website, in just over a decade, New Dairy has established a foothold in Southwest China, with deep layouts in East China, Central China, North China, and Northwest China, gradually expanding its nationwide presence and building a city-based dairy fleet centered on its “Fresh Strategy.” The company currently has 52 subsidiaries, 15 major dairy brands, 16 dairy processing plants, and 12 own farms.

However, this “buy-and-build” growth model has faced bottlenecks in recent years. In 2024, New Dairy’s revenue declined 2.93% year-on-year to 10.665 billion yuan, marking its first revenue decline since 2015. In the first three quarters of 2025, revenue grew 3.49% to 8.434 billion yuan, showing signs of recovery, but compared to previous rapid growth, the revenue growth rate has significantly slowed. Under this context, New Dairy’s strategy has shifted toward “internal growth primarily, supplemented by acquisitions.”

The capital market has not shown a positive signal regarding New Dairy’s Hong Kong IPO. On March 12, its stock price dropped 9.21% to 18.05 yuan per share. Regarding the lukewarm sentiment in A-shares, Shen Meng said, “A-share valuation and liquidity are better than H-shares. If a company chooses to delist from A-shares and issue H-shares, it indicates they have no choice but to raise funds in Hong Kong, which may dilute earnings per share and is not a positive signal for A-share investors.”

Regarding plans for Southeast Asian markets, Beijing Business Today sent interview requests to New Dairy via email, but as of press time, no response has been received.

Beijing Business Today Reporter: Kong Wenxie