Jan 18, 2019 (China Knowledge) - New Hope Dairy <002946.SZ> welcomed its first day of new share purchase on Wednesday after frequent M&As had put the company in a debt crisis and weakened its competitiveness.
During its online roadshow, the company’s chairman admitted that the company is currently facing competitive disadvantages due to its lack of capital and single financing channel. According to its prospectus, the debt ratio of New Hope Dairy in 2015, 2016 and the first half of 2017 reached 66.09%, 76.01% and 72.42% respectively, which was higher than the industry average.
The company had commenced planning for its IPO as early as 2013 and completed the establishment of its overseas Red Chip structure in 2015. However, the plan could not materialize and was scrapped. The company finally chose to list on the SMEs board.
New Hope Dairy currently dominates the dairy industry in the southwest corner as a result of its M&As. Following its IPO, the company had hoped to gain more market share in Eastern and Southern China but failed to bring significant disruption to the industry. The company now ranks fifth in the Chinese dairy industry after Yili, Mengniu, Guangming, and Sanyuan.
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