New Dairy Ventures to Hong Kong for Fundraising to Achieve "A+H"

Following Junlebao, the Hong Kong Stock Exchange may welcome the second dairy company to file for listing this year. On the evening of March 11, New Dairy Industry announced that it has officially initiated an IPO in Hong Kong. If successful, New Dairy Industry will become the first domestic dairy company listed in both the “A+H” markets. On March 12, New Dairy Industry’s move to list in Hong Kong was met with a cold splash from the capital market. By the close of trading that day, its stock price plummeted 9.21%, with a total market value of 15.535 billion yuan.

Three Considerations

According to the announcement from New Dairy Industry, the main reasons for listing in Hong Kong involve three strategic considerations: advancing internationalization, building an international capital operation platform, and enhancing the company’s capital strength.

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

Looking at New Dairy Industry’s debt situation, listing in Hong Kong could broaden financing channels and facilitate attracting more overseas capital. From 2022 to 2024, its total liabilities were 6.825 billion yuan, 6.299 billion yuan, and 5.736 billion yuan respectively, with current liabilities reaching 4.261 billion yuan, 4.018 billion yuan, and 3.731 billion yuan. Its debt-to-asset ratio was 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 development, establishing modern breeding and industrial systems. But in recent years, with declining product prices, companies face cash flow shortages. Coupled with the need for industry transformation, domestic firms have limited financing options and can only raise funds through listing.”

Shen Meng, Executive Director of Sang Sang Capital, said, “The purpose of New Dairy Industry issuing H-shares is to raise funds and improve its debt structure. Currently, the IPO market in Hong Kong is very active, which can to some extent meet the company’s financing needs.”

Tapping Overseas Markets

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

According to Euromonitor data, the scale of China’s liquid milk industry in 2024 is 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 by September 2025, the total retail sales of dairy products in China declined by 16.8% year-over-year.

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

Previously, New Dairy Industry had disclosed overseas market plans. As early as June 2025, Vice President Zhang Shuai publicly stated that the company would leverage the global resources of Bright Food Group to adopt a “light deployment” strategy, focusing on Southeast Asia and other opportunity markets with a “half-step ahead” approach.

It is reported that New Dairy Industry’s internationalization plan involves three steps: first, achieving dual-driven 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 management.

Is the Timing Right?

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

Chinese food industry analyst Zhu Danpeng said, “Currently, it’s an optimal time and opportunity for Chinese companies to challenge the Hong Kong stock market. The ‘A+H’ dual listing benefits from national policy support and consumer market dividends. New Dairy Industry has a certain market share and recognition in the fresh milk segment.”

In the past, New Dairy Industry rapidly rose to become a leading national dairy company mainly through acquisitions of local dairy firms, and successfully listed on the A-share market in 2019. Its official website shows that in just over a decade, it has established a foothold in Southwest China, with deep layouts in East China, Central China, North China, and Northwest China, gradually expanding nationwide and building a city-based dairy fleet centered on the “Fresh Strategy.” It 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 Industry’s revenue fell 2.93% year-over-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. Against this backdrop, the company’s strategy has shifted toward “mainly internal growth, supplemented by acquisitions.”

Market reactions have cast a shadow over New Dairy Industry’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, “Valuations and liquidity in A-shares are better than in H-shares. If a company chooses to leave A-shares for H-shares, it indicates they need to raise funds in Hong Kong, which could dilute earnings per share and is not a positive signal for A-share investors.”

Regarding plans for Southeast Asian markets, Beijing Business Today sent an interview request to New Dairy Industry via email but had not received a reply as of press time.

Beijing Business Today Reporter: Kong Wenxie