Shares in Inner Mongolia Yili Industrial Group Co and China Mengniu Dairy Co have soared to all-time highs as the companies hunt aggressively to build up their milk supply chains through foreign acquisitions. With China’s dairy demand forecast to grow 37 percent to $76 billion in five years-overtaking the United States to become the world’s biggest dairy market-the bull run may have further to go…Full Article: China Daily Oct 2017

Key Points

  • According to Euromonitor International, Inner Mongolia Yili Group (SHA:600887) and China Mengniu Dairy (HKG:2319) have a combined 44% share of China’s dairy market. Shanghai’s Bright Food Group had a 4.8% market share.
  • In 2013, Inner Mongolia Yili Group acquired New Zealand’s Oceania Dairy.

ChinaAg Comments

  • In May 2017, Mengniu Dairy announced it would issue ~USD 194.8 million worth of exchangeable bonds that could be exchanged for Modern Dairy shares. According to the Hong Kong Stock Exchange, if all the bonds are exchanged for the Modern Dairy shares (Hong Kong listed), it would represent 11.24% of Modern Dairy’s issued capital. During the same month, Yili Group attempted to acquire Stonyfield (US yogurt producer) from France’s Danone for approximately USD 850 million. Danone ended up selling Stonyfield to their compatriots Lactalis (French dairy company).
  • In January 2017, Chinese dairy producers reported declining profit margins due to e-commerce imports of foreign brands, high costs, price competition, and inventory issues. During the same month, Mengniu Dairy proposed increasing its stake in Modern Dairy from 25.4% to 39.9%. Modern Dairy manages 114,600 dairy cows.
  • From January to June 2016, China Mengniu Dairy’s recorded a net profit decline. The decline was partially due to losses from China Modern Dairy and a decline in raw milk prices. China Mengniu Dairy had a 25.41% stake in China Modern Dairy at the time.
  • In 2016, according to Expo315, market sales from 10 leading Chinese infant formula brands totaled CNY 25 billion (USD 3.79 billion), while sales from the top 5 leading foreign brands totaled ~CNY 35 billion [~USD 5.3 billion].
  • In January 2013, Inner Mongolia Yili Group announced it would in establish an infant formula factory in South Canterbury, New Zealand (South Island), as part of its acquisition of Oceania Dairy. The factory began operation in 2014. As of 2015, the majority of its infant formula products were shipped to mainland China.
  • Established in 2006 and headquartered in Shanghai, Bright Food Group listed subsidiaries include Bright Dairy & Food (SHA:600597), Shanghai Jinfeng Wine, aka Shanghai First Provisions Store (SHA:600616), Shanghai Maling Aquarius (SHA:600073), and Bright Real Estate Group, aka Shanghai Haibo (SHA:600708).
  • Founded in 1999 and headquartered in Hohhot, Inner Mongolia Region, China Mengniu Dairy (HKG:2319) is one of the leading dairy product manufacturers in China, with “MENGNIU” as its core brand. In addition to milk, the company also produces and distributes ice cream, infant formula, yogurt, and cheese.
  • 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.

Hong Kong Trends

Similar Posts by ChinaAg

Spread the word. Share this post!