China’s Ministry of Commerce (MOFCOM) said that its antitrust review decision on April 13 “did not forbid” Inner Mongolia Yili Industrial Group Co from buying a controlling stake in China Shengmu Organic Milk, according to a statement posted on the ministry’s website on Saturday [29 April 2017]. Yili refused to comment on the matter when contacted by the Global Times on Tuesday…Full Article: The Global Times May 2017

Key Points

  • Inner Mongolia Yili Group (SHA:600887) gave up on its plan to acquire a 37% stake in in China Shengmu Organic Milk (HKG:1432) after Yili failed to get the approval of the Ministry of Commerce by an April 21st deadline.
  • In November 2016, Yili Group announced it would acquire a 37% stake in Shengmu for HKD 5.29 billion [~USD 678 million] at HKD 2.25 (USD 0.32) per share.

ChinaAg Comments

  • In November 2016, Yili Group announced a profit increase (20.69% year-on-year)during the first three quarters (January to September) of 2016. Yili Group attributed part of its profit increase to sales of its Ambrosial high-end yogurt (Greek yogurt product).
  • In October 2016, Yili Group announced it would issue a CNY 9 billion [~US$1.3 billion] private placement of new shares to be raised by Hohhot City Asset Investment, Inner Mongolia Transportation Investment, Jinshi Haorui Investment [Qingdao based private equity firm], Ping An Asset Management [Hong Kong based insurance company], and Jinmeihua Investment. Of the CNY 9 billion, CNY 4.6 billion [~680 million] would be used to acquire a 37% stake in China Shengmu Organic Milk (HKG:1432).
  • In September 2016, Sunshine Insurance Group increased its stake in Yili Group. As a result, Inner Mongolia’s largest shareholders included Hohhot Investment (8.8%), Hong Kong Securities Clearing (6.22%), and Sunshine Insurance Group (5%).
  • In 2015, Inner Mongolia Yili Group was ranked China’s top consumer brand, and was followed by Master Kong (see Tingyi Cayman Islands), Mengniu and Want Want China. In the same year, Mengniu Dairy had a 37% share of China’s high-end milk market, followed by Yili Group (26.6%) and Shengmu (7.6%).
  • Inner Mongolia Yili Group (SHA:600887) traces its roots back to 1956 when it operated as a dairy cooperative in Hohhot, Inner Mongolia Region. In 1993, the company was restructured as Yili Group and began its ice cream operations. Currently, Yili produces milk, milk beverages, sorbet, ice cream, milk powder, milk tea powder, yoghurt, and cheese. Since 2005, the company has been China’s top supplier of milk powder and milk tea powder.
  • Founded in 2009 and headquartered in Bayannur, Inner Mongolia Region, China Shengmu Organic Milk (HKG:1432) is China’s largest organic milk producer and had an estimated 54% market share (organic milk) in 2013.
  • Founded in 1988 and headquartered in Hong Kong, Ping An Insurance (HKG:2318) &  (SHA:601318) is a financial services company whose products include exchange-traded funds (ETF), life insurance, and other banking/investment services.

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