IPO cuts 430 million in fundraising: Southern Dairy's "sacrifice" and "gain"

Ask AI · Behind the fundraising “diet,” how does Southern Dairy prioritize protecting its core milk source projects?

Fundraising cut in half, and performance slows down.

《Investor Network》Jiang Ji

On March 18, 2026, the Beijing Stock Exchange Listing Committee reviewed and approved the IPO application of Guizhou Nanfang Dairy Co., Ltd. (hereinafter “Nanfang Dairy”). This marked a number of years since the company first initiated IPO counseling. As a key state-owned enterprise under the Guiyang municipal SASAC, Nanfang Dairy’s path to listing has been anything but smooth—starting with its bid for the Shanghai Stock Exchange main board, then transitioning via the National Equities Exchange and Quotations (NEEQ), and ultimately settling on the Beijing Stock Exchange.

Notably, the company’s fundraising plan underwent a major “diet.” From the originally planned RMB 980 million, after two rounds of adjustments, it was ultimately cut to RMB 550 million—an over 40% reduction. Among this, the planned RMB 100 million for “supplementing working capital” was completely canceled. At the same time, the company also faces internal challenges such as noticeably slowed revenue growth, a high reliance on a single regional market, and a research and development system that needs improvement. With industry national giants such as Yili Co., Ltd. (600887) and Inner Mongolia Mengniu Dairy (2319.HK) having already completed their major capacity layout and capital expenditures trending toward stability, whether Nanfang Dairy can break through the ceiling of regional limitations with capital power still needs time to be verified.

A Bumpy Listing Journey: A Strategic Shift from the Main Board to the Beijing Stock Exchange

As early as January 2023, Nanfang Dairy signed a counseling agreement with CITIC Securities, targeting the Shanghai Stock Exchange main board. For a regional leader with a state-owned background, the main board means higher liquidity and a stronger brand effect, aligning with its identity positioning. However, as A-share IPO policies tightened in stages since 2023, regulators’ guidance on board placement became increasingly clear. The main board highlights the “large-cap blue-chip” characteristics, and the listing thresholds for some traditional industries increased significantly.

Facing uncertainty along the main board path, Nanfang Dairy chose to list on the NEEQ and officially listed on December 26, 2023. Listing on the NEEQ makes the company an unlisted public company, enabling it to adapt early to information disclosure requirements and laying the groundwork for a subsequent backdoor-to-upgrade listing. In January 2024, the company formally changed its filing board for listing counseling to the Beijing Stock Exchange.

Behind this strategic shift are two considerations: listing certainty and alignment with the board’s positioning. Compared with the main board, whose review standards were tightening at the time, the Beijing Stock Exchange—positioned as a main venue serving innovation-oriented small and medium-sized enterprises—was a better fit for Nanfang Dairy’s characteristics as a regional dairy leader seeking upgrades and development. It also provides more predictable prospects for qualifying companies. After the board change was completed, the IPO process accelerated notably, and ultimately it successfully passed review in March 2026.

“Fundraising Diet”: Regulatory Guidance and Strategic Focus

Throughout Nanfang Dairy’s entire IPO process, the dramatic changes to its planned use of raised funds are the most noteworthy phenomenon. According to the initial prospectus submitted, the company planned to raise a total of RMB 980 million. However, in subsequent updated filing documents, this figure was cut in two steps to RMB 550 million, reducing the total amount by RMB 430 million.

This adjustment was not arbitrary; it had a clear rationale. The core pillar, “Weining Nanfang Dairy Cattle Breeding Base Construction Project,” with an investment amount of RMB 400 million, remained unchanged across the two scheme versions. This shows that strengthening control over upstream milk sources is Nanfang Dairy’s most core and unshakable strategy. Having stable, high-quality, and cost-controllable self-owned milk sources is key for regional dairy companies to build a quality moat when competing with national brands. No matter how the financing scale is adjusted, the company will prioritize ensuring the funding needs of this core project.

The “worst-hit areas” for the funding reduction were the “marketing network construction project” and “supplementing working capital.” Investment in marketing network construction was slashed from RMB 480 million to RMB 150 million, while the RMB 100 million working capital supplementation was completely canceled.

In response to the regulators’ detailed review of the necessity and reasonableness of the projects funded by the IPO proceeds, Nanfang Dairy proactively cut the fundraising scale substantially—a pragmatic, strategy-oriented adjustment aimed at improving the success rate of passing review. Canceling the “supplementing working capital” project is also a direct response to regulators’ inquiries. Modestly lowering the amount raised can also help the company set a more reasonable issue price, leaving room for the post-listing stock price performance.

The Dilemma of a Regional Leader: Slowing Growth and the Challenge of Going National

Passing review is only the first step for Nanfang Dairy toward the capital market. After listing, it will be a public company, facing ongoing scrutiny from investors, regulators, and the market under the spotlight. The company’s internal challenges will directly determine whether it can translate IPO success into long-term business success.

Slowing revenue growth and bottlenecks in profitability are the issues most concerned by both the market and regulators. Data show that in 2024, the company’s operating revenue was about RMB 1.85 billion, with a year-on-year increase of only 0.66%; in 2025, the growth rate was also just 1.19%, which is clearly slower compared with the growth rate in the prior year. In a fiercely competitive dairy products industry, once growth momentum is lost, it is easy to fall into price wars in a mature market. How to find a new growth engine—whether through product upgrades, category expansion, or channel innovation—is Nanfang Dairy’s top issue to solve urgently.

In addition, the regional reliance dilemma of a “regional leader” is also very evident. Nanfang Dairy’s strong position is mainly reflected within Guizhou province (2024 market share about 70.06%). This highly concentrated regional dependence is a double-edged sword. It helps build strong brand and channel barriers in the local market, but it also limits the company’s room for growth. The capacity of the Guizhou market is ultimately limited; if it cannot successfully expand into out-of-province markets, the company’s ceiling will be obvious. However, expanding outward means facing direct competition with local “local strongmen” as well as national brands, placing very high demands on the company’s brand, channel, and supply-chain management capabilities.

Shortcomings in R&D and product innovation also cannot be ignored. With consumer demand becoming increasingly diverse, health-oriented, and premium, product innovation capability is the core for dairy companies to maintain competitiveness. The dairy industry has begun to establish evaluation standards for R&D systems, raising higher requirements for companies’ ongoing innovation ability. Whether functional yogurt, premium plain milk, or emerging categories such as plant-based products and cheese—all require strong R&D strength to support them. If R&D capabilities are insufficient, the company will struggle to escape homogeneous competition and will not be able to enjoy the higher gross margins brought by product structure upgrades.

If it successfully lists, it may bring Nanfang Dairy new opportunities and tools to address the challenges above. But listing is not the endpoint; the real test is whether the company can make good use of the capital platform and successfully achieve the leap from a “regional leader” to a “well-known national brand.” What do you think? Talk in the comments. (Produced by Thinking Finance)