Severe debt repayment pressure, New Hope Dairy Group plans to list in Hong Kong with a valuation of over 10 billion

(Damo Finance)

Produced by | Damo Finance

Liu Yonghao and his daughter Liu Chang are at it again, bringing another IPO to the table.

On April 2, Xinxin Hope Dairy Co., Ltd. (hereinafter “New Dairy”) submitted its application to the Hong Kong Stock Exchange. The joint sponsors are JPMorgan Chase and CITIC Securities.

New Dairy (002946.SZ) was established in 2001, incubated by Xinhonghao Group. Starting from Southwest China, New Dairy expanded its scale through continuous mergers and acquisitions. It was listed on the Shenzhen Stock Exchange in 2019. If this Hong Kong IPO is successful, New Dairy will become the first dairy enterprise in China to achieve listings in both “A+H” locations.

Today, New Dairy has grown into a leading dairy company in China. Under its umbrella, it has more than 20 dairy product brands, including Xinhonghao, Asahi VIP, Today’s Fresh Milk Shop, Huirun, and others. The prospectus shows that, based on retail sales of liquid dairy products or chilled liquid dairy products in 2025, New Dairy ranks fifth in China’s liquid milk industry and is also the No. 1 player in the chilled liquid milk industry in the Southwest region.

In recent years, New Dairy’s overall performance has shown a growth trend. In 2025, the company’s revenue was RMB 11.233 billion, up 5.33% year over year; its net profit attributable to shareholders was RMB 0.731 billion, up 35.98% year over year.

Chilled milk products have been the main driver of New Dairy’s performance growth in recent years. In recent years, China’s dairy products market overall has faced pressure, but the chilled milk market is still expanding. Data from the National Bureau of Statistics shows that in 2025 (January to December), the output of dairy product manufacturing enterprises in China reached 29.503 million tons, down 1.1% year over year. However, according to data from the “Masanting Intelligence Station,” in the fourth quarter of 2025, domestic chilled yogurt and chilled pure milk sales in China increased by 13.00% and 25.22% year over year, respectively.

With many initiatives in the chilled milk sector, New Dairy has caught the industry tailwind. Between 2023 and 2025, the revenue from the company’s chilled liquid milk products increased from RMB 4.925 billion to RMB 6.049 billion, and the share of total revenue rose from 44.8% to 53.8%. By contrast, the revenue and production ratio of the company’s room-temperature liquid milk products has been continuously declining.

From the perspective of shareholding percentages, New Dairy is deeply linked to the Liu Yonghao family. By the end of 2025, Liu Yonghao and Liu Chang together controlled 76.49% of the company’s shares. Among them, Universal Dairy Limited, wholly owned by Liu Chang, holds 65.07% of the company’s shares, while Xinhonghao Investment, wholly controlled by Liu Yonghao, holds 11.42% of the company’s shares. In recent years, New Dairy has continued to increase its dividend payout ratio. With large equity holdings, Liu Yonghao and his daughter can also receive substantial dividends. Only in 2025, the cash dividends that the two of them can receive are close to RMB 300 million.

Liu Chang is 46 years old, holds Singapore citizenship, and currently serves as a director of New Dairy. In addition, Liu Chang also serves as a director of Xinhonghao Group, chairman of Xinhonghao (000876.SZ), and chairman of Xinhonghao Investment, among other roles.

As of the close on April 3, New Dairy’s share price was RMB 17.80 per share, with a total market capitalization of approximately RMB 15.3 billion. Since the beginning of 2025, the company’s share price has cumulatively increased by 25.13%.

“New Dairy is short of cash”

For this listing in Hong Kong, New Dairy plans to use the fundraising proceeds for purposes such as enhancing brand positioning and expanding its sales network, improving product innovation, biotechnology, and digital capabilities, expanding supply chain infrastructure, and replenishing working capital.

At the time of its Hong Kong listing and financing, the company’s financial situation once again drew market attention.

Since its establishment, New Dairy has frequently expanded its scale through acquisitions. After being established in 2001, the company acquired multiple dairy enterprises, including Kunming Xuelan, Sichuan Huaxi, Anhui Baidi, Hangzhou Shuangfeng, and Qingdao Qin牌, achieving a layout across regions such as Southwest China, East China, and North China. After 2015, the company started a second round of expansion, acquiring four dairy brands—Nanshan, Shuangxi, Asahi VIP, and Sanmu—further deepening its presence in Southwest and East China and filling the gap in Central China. In 2020, the company also spent RMB 1.71 billion to acquire 100% equity in Ningxia dairy enterprise Huanmei Dairy.

Through continuous acquisitions, New Dairy’s revenue scale has grown rapidly. Since it listed in 2019, the company’s revenue scale has increased from RMB 5.6 billion to RMB 11.2 billion, nearly doubling. However, after acquiring brands and building subsequent production lines, New Dairy has carried a heavy capital burden.

Taking the transaction to acquire Huanmei Dairy as an example, in the consideration for that deal, RMB 1.027 billion was paid in cash, and the remaining RMB 680 million was paid in the form of issuing convertible bonds. This December, the convertible bonds with a size of RMB 718 million are set to mature, but as of the end of this year’s first quarter, only about RMB 120,000 worth of the convertible bonds has been converted, and the remaining amount is still pending repayment.

As of the end of 2025, New Dairy’s asset-liability ratio was approximately 56.51%. Although it has decreased compared with the company’s earlier years, it can still be relatively high among leading dairy companies. In the same period, the company’s balance of monetary funds and trading financial assets was about RMB 568 million, but its short-term borrowings and non-current liabilities due within one year totaled as much as RMB 1.812 billion.

In recent years, New Dairy’s debt servicing pressure has been increasing continuously. The prospectus shows that between 2023 and 2025, the company’s net cash outflow from financing activities was RMB 946 million, RMB 971 million, and RMB 1.09 billion, respectively. The increase in outflow was mainly because the amount of loan repayments continued to rise. As a result, New Dairy’s overall cash flow turned from positive to negative; between 2023 and 2025, it was RMB 15 million, RMB -47 million, and RMB -66 million, respectively.

It is worth noting that, while New Dairy is under debt pressure, the company’s dividend scale is rising continuously. At the beginning of its listing in 2019, the company’s annual dividend amount was RMB 51 million, and its dividend payout ratio was about 21.02%. By 2025, the company’s annual dividend amount had reached RMB 387 million, and the ratio of dividends to net profit attributable to shareholders also rose to 52.97%.

As of the end of 2025, Liu Yonghao and Liu Chang together held 76.49% of New Dairy’s shares, meaning that the vast majority of the dividends mentioned above will flow into Liu Yonghao and his daughter’s hands. Only in 2025, the two of them can receive close to RMB 300 million.

For New Dairy, if it can successfully raise funds by listing in Hong Kong, it may help the company further optimize its asset-liability structure.

In addition, expanding overseas business is also one of the purposes of New Dairy’s Hong Kong IPO. In a previously released announcement, the company stated that listing in Hong Kong can meet the company’s business development needs, deepen its internationalization strategy, build an international capital operations platform, and further enhance its capital strength.

Last June, Zhang Shuai, vice president of New Dairy, also publicly stated that the company will “move lightly” by leveraging Xinhonghao Group’s global resource layout, focusing on opportunity markets such as Southeast Asia with a “half-step faster” strategy.

Xinhonghao was once embroiled in the Lvjie campus meal food safety controversy

According to information on its official website, Xinhonghao Group was founded by Liu Yonghao in 1982 and has been in operation for 44 years. Xinhonghao Group’s main businesses are modern agriculture and animal husbandry as well as the food industry. It has world-leading feed production capacity and China’s leading meat processing and processing capabilities. It is currently one of the largest integrated suppliers of meat, eggs, and milk in China.

Since 2011, when Liu Yonghao was 60 years old at the time, he began gradually delegating power to his daughter Liu Chang. In 2013, Liu Chang officially took over as chairman of the board of the listed company Xinhonghao from her father.

Currently, the companies controlled by Liu Yonghao and Liu Chang hold stakes in multiple listed companies, including Xinhonghao, Feima International (002210.SZ), Huarong Chemical (301256.SZ), New Dairy, and Xinhonghao Service (03658.HK). Previously, they also held control over Hualai Cloudxin (600155.SH) and Xingyuan Environmental (Rights Protection) (300266.SZ).

Under Liu Chang’s leadership, Xinhonghao Group has continued to change its development style in recent years: on the one hand, divesting traditional assets; on the other hand, investing in emerging industries. For example, in 2024, the listed company Xinhonghao divested equity in six feed subsidiaries at once, including Hainan Xinhonghao, Nanchang Guoxiong, and Nanning Guoxiong, among others, and transferred its holdings in two jointly invested subsidiaries—Minsheng Insurance and Qingdao Damuren Machinery. The total cash returned exceeded RMB 1.0 billion.

As for investments, Liu Chang has mainly focused on emerging industries. In recent years, the Xinhonghao ecosystem has invested in IPOs such as Shunfeng Chengcheng and MeiYin Genomics. It has also participated in investments in cutting-edge technology companies such as food processing robot company Xixi Intelligent, and embodied data unicorn Guanglun Intelligent, among others.

It is worth noting that last year’s Shanghai Lvjie campus meal food safety incident pulled Xinhonghao into a public-opinion storm. Shanghai Lvjie is a subsidiary of Kilcoy Global Foods. The latter is an Australian beef company acquired by the Xinhonghao ecosystem more than a decade ago. The Liu Yonghao family currently holds 45.44% of the equity in Kilcoy Global Foods through a trust. Kilcoy Global Foods attempted to list twice: first, it submitted its prospectus to the Hong Kong Stock Exchange in 2020 but failed; later, it listed in the United States in June 2025. After the Lvjie incident, there has been no further progress.

As the incident gained momentum, the listed company Xinhonghao responded, stating that the listed company has no equity, management, or business relationship with Lvjie. In November 2025, the investigation team for the “Lvjie Food Safety Incident” in Shanghai released a situation briefing. It revoked Shanghai Lvjie’s food business license and business license. The company’s actual controller, Zhang Mouhua, and eight other responsible individuals were also arrested and prosecuted according to law.

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