New Dairy plans to list on the H-share market; why did the A-share stock price hit the limit down during trading?

On the evening of March 11, New Dairy Industry (002946.SZ) announced its plan to issue H-shares and list on the Hong Kong Stock Exchange. After the market opened today, New Dairy Industry’s stock price quickly fell sharply, hitting the daily limit at one point.

Refinancing through the Hong Kong market is also one of the main financing methods for domestic companies, but industry insiders speculate that currently, the Hong Kong market’s attention to the dairy industry is not high, and there may be market concerns.

According to the announcement, to meet the company’s business development needs, deepen the internationalization strategy, build an international capital operation platform, and further enhance the company’s capital strength, New Dairy Industry plans to issue overseas listed foreign shares (H-shares) and list on the Main Board of the Hong Kong Stock Exchange. The scale of the H-share issuance will not exceed 15% of the total share capital after issuance, with an over-allotment option granted. The funds raised will mainly be used for product upgrades, market expansion, supply chain upgrades, technological R&D, digital construction, and company operations.

In recent years, as domestic market competition intensifies, internationalization has become a key focus for domestic dairy companies, especially in Southeast Asia. Companies like Yili, Mengniu, Feihe, and Junlebao are all expanding into this region. At the 2025 investor conference, New Dairy Industry’s management stated that they are seeking to go global and create a second growth curve, targeting differentiated growth opportunities in the Southeast Asian flavored milk market. Southeast Asia has a population of nearly 700 million, with per capita liquid milk consumption generally below 20 kilograms per year, leaving significant room for growth.

However, after today’s market open, New Dairy Industry’s stock price continued to decline, closing before noon at 17.9 yuan per share, down 9.91%.

Shen Meng, Executive Director of Xiangsong Capital, told reporters that currently, there are generally two situations for A-share listed companies to go public in Hong Kong. One is to support the construction of Hong Kong as an international financial center and expand Hong Kong’s financial market business, mainly large top-tier A-share companies. The other is that due to industry restrictions and difficulties in refinancing, some companies choose to issue H-shares for moderate financing. New Dairy Industry is more likely to fall into the second category. However, from the current perspective, the H-share market is not very enthusiastic about dairy companies, and financing costs and issuance prices may be affected, which could cause market concerns.

Independent dairy industry analyst Song Liang stated that over the past decade, Chinese dairy companies have accelerated supply chain construction, establishing modern breeding and industrial systems. Currently, the entire industry is shifting from basic nutrition to functional nutrition, which requires substantial capital. Although Hong Kong’s financing capacity is relatively weak, its listing threshold is lower than that of A-shares, and it also offers long-term benefits for the next stage of internationalization development.

(Article from First Financial)