A DAIRY company in China with milk production from 40,000 cows intends listing on the Australian Securities Exchange in November and will have a market capitalisation of about $145 million as it steps up the hunt for Australian assets.
China Dairy Corporation is in the final stages of preparing for a listing on the ASX and a capital raising of up to $20 million. It is eyeing potential acquisitions among Australian dairy processing companies and also dairy farms in Australia to expand its throughput, in a twin strategy that also centres on expanding its own dairy businesses in China.
The company's chief executive is Youliang Wang and a listing will expand the number of dairy companies and producers on the ASX in a sector that has experienced a raft of corporate activity. Australia's biggest milk processor, Murray Goulburn, raised $500 million and undertook a partial listing on the ASX via a unit trust in July.
It allowed non-farmer investors to buy a stake for the first time. Another company with dairy interests and seafood businesses, Beston Global Foods, listed on the ASX in August this year.
BlueMount Capital, with offices in Australia and Asia, is understood to be putting the final touches to the ASX listing plans for China Dairy Corporation.
It intends to list the company on the ASX via Chess Depositary Interests, which allow international companies to trade on the local stock exchange.
Presentations to potential investors are thought to outline that China Dairy Corporation had revenues of about $80 million in 2014-15. The initial public offering is built around an issue price of 20¢ per share. The pre-IPO valuation of the firm is $130 million.
China Dairy Corporation has five main customers and has land use rights over about 17.4 square kilometres across five sites in north-eastern China. The group owns cows in its own right and also has contractual arrangements with a number of other partners which meant it had access to milk from 40,000 cows at June 30, 2015.
An overview of the dairy sector in Australia published this month by industry body Dairy Australia expects milk production in 2015-16 from Australian farmers to rise by about 2 per cent to between 9.8 billion and 10 billion litres.
This follows growth of 3.8 per cent in 2014-15 to 9.7 billion litres.
Dairy Australia also outlined that free trade agreements such as the China Australia Free Trade Agreement had created strong positive sentiment and a significant boost to farmer confidence. "Market access prospects have benefited from an historic period of increased trade liberalisation," the organisation stated in its Dairy Situation and Outlook report in October, 2015.
The report also outlined that private label fresh white milk continues to take market share from branded products, increasing from 61 per cent to 63 per cent on a 2.4 per cent increase in sales volumes. Branded sales fell 4.3 per cent in volume. Woolworths and Coles have been aggressively pushing home brand private label milk in their supermarkets over the past few years.
