Guizhou Milk King, which has taken over 70% of the local market, can no longer hide itself

Listing | Read Business Era

Editor | Li Xiaoyan

On March 18, Southern Dairy successfully passed the review at the Beijing Stock Exchange. This regional dairy company, which has long been deeply rooted in the Guizhou market, has finally reached the threshold of the capital market.

In Guizhou, Southern Dairy’s flagship brand, Shanhua Milk, has long integrated into residents’ daily lives. From breakfast to late-night snacks, this local brand is almost embedded in the blood of Guizhou people. By 2024, Southern Dairy’s market share within Guizhou province is nearly 70%, meaning that for every three boxes of milk, two come from it. As the leading local dairy company, Southern Dairy is not only a consumer brand but also, to some extent, carries the industry mission of “Qian Milk Going Out of the Mountain.”

This highly penetrated regional advantage forms the company’s most solid foundation. Financial data shows that from 2022 to 2024, the company’s operating revenue was 1.575 billion yuan, 1.805 billion yuan, and 1.817 billion yuan, respectively, with net profits attributable to shareholders of 173 million yuan, 200 million yuan, and 210 million yuan. Despite the overall industry pressure, the company maintained profit growth, demonstrating strong regional operational resilience.

But the other side is equally clear: growth momentum is slowing down. In 2023, the company’s revenue grew by 14.6% year-over-year, but by 2024, it had dropped to 0.66%; for 2025, an estimated full-year revenue growth of about 1.19% is projected. Behind this change is the fact that the company’s penetration rate in Guizhou is nearing its ceiling. The more core issue lies in the structure: during the reporting period, over 90% of the company’s revenue came from within Guizhou Province. Although products have entered surrounding markets such as Hunan, Sichuan, Chongqing, Guangxi, and Guangdong, there has yet to be an effective growth pole outside the province. Compared to the national dairy landscape, Southern Dairy’s market share in 2024 is only about 0.35%, while leading companies account for nearly 40%, showing a significant gap.

This is also a key focus of regulatory inquiries—whether the company has the ability to expand beyond Guizhou. Southern Dairy’s pragmatic approach involves collaborating with regional dairy companies, building logistics lines outside the province, and gradually expanding channels, advancing outward with a “small steps, quick pace” strategy.

Centered on this core weakness, the company’s IPO fundraising plan is also quite clear. According to the latest prospectus, it aims to raise 550 million yuan, with 400 million yuan allocated to the Weining dairy cattle breeding base, and 150 million yuan for marketing network development. The former aims to increase self-sourced milk proportion and strengthen upstream control, while the latter directly targets brand promotion and channel expansion, paving the way for nationwide growth.

It is worth noting that this round of fundraising is significantly smaller than the previous 980 million yuan, a decrease of over 40%, and the plan to supplement working capital has been canceled. This adjustment reflects, on one hand, stricter regulatory compliance under tighter supervision, and on the other hand, indicates a more cautious strategy focused on higher certainty investments.

Another area of concern is R&D. As a dairy company with annual revenue exceeding 1.8 billion yuan, Southern Dairy has long employed only seven full-time R&D personnel, with R&D expenses accounting for less than 1%. In an industry where product innovation is increasingly key to competition, this level of investment is relatively low. To address this R&D shortfall, in February, Southern Dairy publicly recruited PhD students in livestock breeding and product development, promising industry-competitive salaries.

Meanwhile, on the branding front, Southern Dairy is accelerating its efforts. Recently, its Shanhua Milk special edition packaging design won the WGA WONDER GLOBAL DESIGN AWARD Silver Prize in the graphic design category. The design incorporates iconic Guizhou elements such as Pingyuan Ancient Town, JX Lou, and Qianhu Miao Village into the main visual system, reinforcing origin recognition and brand memory in high-frequency consumption scenarios. To some extent, this “portable regional symbol” not only enhances product recognition but also provides a new way to communicate its brand outside Guizhou.

This IPO marks a pivotal turning point for Southern Dairy—from relying on a single regional market to competing in a broader environment. For Southern Dairy, whether “Shanhua” can step out of Guizhou depends not only on capacity expansion and channel deployment but also on whether it can establish a truly recognizable and sustainable competitive advantage in the national market.