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

Following Junlebao, the Hong Kong Stock Exchange may welcome its second dairy company to list 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 to be listed in both the “A+H” markets. On March 12, New Dairy’s Hong Kong listing plan was met with a cold splash from the capital market. By the close of trading that day, New Dairy’s stock price plummeted 9.21%, with a total market value of 15.535 billion yuan.

Three Considerations

According to the announcement from New Dairy, 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 through the Hong Kong listing 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, the Hong Kong listing 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. The debt-to-asset ratio stood at 71.91%, 70.47%, and 64.61%, remaining 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 issuing H-shares is to raise funds and improve its debt structure. Currently, there is strong participation in IPOs in Hong Kong, which can somewhat meet the company’s financing needs.”

Tapping Overseas Markets

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

According to Euromonitor data, in 2024, China’s liquid milk industry is valued at 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 sales of dairy products across channels in China declined by 16.8% year-over-year.

In recent years, as domestic market competition intensifies, internationalization has become a key breakthrough for Chinese dairy companies to overcome growth challenges. 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 these markets.

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

According to reports, New Dairy’s internationalization plan involves three phases: 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 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?

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 has a certain market share and brand recognition in the chilled fresh milk segment.”

In the past, New Dairy mainly expanded rapidly through acquisitions of local dairy companies, quickly becoming a leading national player, and successfully listed on the A-share market in 2019. Its official website shows that 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 building a nationwide presence centered around its “Fresh Strategy,” forming a city-based dairy alliance fleet. Currently, it 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-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 with significantly slowed growth compared to previous rapid expansion. Under this context, New Dairy’s strategy has shifted toward “internal growth primarily, supplemented by acquisitions.”

Market reactions cast a shadow over New Dairy’s Hong Kong IPO. On March 12, its stock price fell 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 delist from A-shares and issue 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 Asia and other markets, Beijing Business Today sent an interview request to New Dairy via email but had not received a reply as of press time.

Source: Beijing Business Today