High Debt Ratio, New Hope Dairy Plans to Raise Funds in Hong Kong

If successfully listed, New Hope Dairy will become the first domestic dairy company to achieve “A+H” shares. Chairman Liu Yonghao’s capital footprint will expand further, but the market has not responded positively.

Recently, Xinliuying (002946), a dairy company under New Hope, announced that to meet business development needs, deepen internationalization strategies, and build an international capital operation platform, thereby enhancing capital strength, the company’s board approved plans to issue overseas listed foreign shares (H-shares) and list on the Hong Kong Stock Exchange Main Board.

If successfully listed, Xinliuying will be the first domestic dairy company to achieve “A+H” shares. However, the capital market has not shown a positive response.

On the trading day after the announcement (March 12), Xinliuying’s stock price plummeted 9.21%, the largest drop in nearly a year. The next day, it continued to decline, with a two-day total drop of 10%. The company’s market value fell from 17.11 billion yuan to 15.415 billion yuan, reflecting concerns in the market about its financing motives and potential risks.

High debt ratio

In terms of revenue scale, Xinliuying ranks fifth in the domestic dairy industry, behind Yili, Mengniu, Bright Dairy, and Junlebao, placing it in the “second tier.”

In the first three quarters of 2025, the company’s revenue reached 8.434 billion yuan, a year-on-year increase of 3.49%. Amid intensified industry competition and cyclical supply and demand conflicts, it remains one of the few dairy companies still growing.

Why choose to go public in Hong Kong now? The company attributes this to the needs of its internationalization strategy and has explicitly stated it will focus on markets such as Southeast Asia. However, in reality, exporting dairy products faces many obstacles, and even leading dairy companies with a scale of hundreds of billions of yuan have yet to achieve significant overseas revenue contributions. Relying on listing on the Hong Kong Stock Exchange to rapidly expand overseas business is not realistic.

Industry experts believe that Xinliuying’s pursuit of financing is mainly to ease its own capital pressure.

As of the end of the third quarter last year, the company’s asset-liability ratio was 59.98%, significantly higher than other leading dairy companies. This is a “legacy” of its early aggressive expansion.

Since 2002, Xinliuying has acquired more than ten regional dairy companies, including Sichuan Huaxi, Kunming Xuelan, Hangzhou Shuangfeng, and Hebei Tianxiang. After 2020, it further acquired Ningxia Xiajin to fill the northwest market gap and invested in the “Yizhi Suannai Niu” brand to enter the fresh yogurt track.

This helped Xinliuying transition from a southwestern regional dairy company to a nationwide player. Its scale grew rapidly: in 2010, its revenue was just over 1.6 billion yuan, and by 2022, it officially crossed the 10 billion yuan threshold.

The hidden risks of expansion through acquisitions include Xinliuying’s asset-liability ratio, which was far above the industry average, reaching nearly 72% in 2022. This has led management to openly state that they will work to reduce the asset-liability ratio and focus on organic growth.

Liu Yonghao family once planned to reduce holdings

Industry insiders believe that an IPO in Hong Kong could help Xinliuying improve its debt structure.

Last year, Hong Kong’s listing policies became more friendly, prompting many leading A-share companies to pursue dual listings (A+H). Currently, several consumer companies listed in both places include “Soy Sauce King” Haitan Weiye, “Frozen Food Leader” Anjoy Foods, and “Functional Beverage First Stock” Dongpeng Beverage.

During the IPO subscription period, these companies attracted significant attention from star institutions, but their market performance after listing has been mixed.

Based on closing prices on March 17, Haitan Weiye and Dongpeng Beverage, which previously saw enthusiastic subscription scenes, have both fallen below their issue prices. Only Anjoy Foods has seen a roughly 20% increase over its issue price.

Regarding ownership structure, Xinliuying is mainly controlled by Liu Yonghao, founder and chairman of New Hope Group, and his daughter Liu Chang. According to Qichacha, as of the third quarter of 2025, the largest shareholder, Universal Dairy Limited (UDL), held 65.07% of shares, with Liu Chang as the actual controller.

With the Liu Yonghao family’s influence, Xinliuying is likely to attract considerable attention. However, it’s worth noting that UDL disclosed a plan to reduce holdings by 3% in mid-2022, though it was not implemented, which still raises concerns about the company’s future prospects.

From a business perspective, Xinliuying’s growth bottleneck has appeared. In 2024, its revenue was 10.665 billion yuan, a decrease of 2.93% year-on-year, marking its first decline in nearly a decade.

Initially, Xinliuying focused on low-temperature milk, differentiating itself from industry giants. But now, major players like Mengniu, Yili, and Junlebao are heavily investing in low-temperature dairy, allocating resources, and increasing promotional efforts, which will likely put pressure on Xinliuying’s product sales.

Xinliuying’s competing fresh milk products. Left: Yu / Photo

Reporter: Shui Fulong

Text Editor: Zuo Yu