China Dairy Corporation is in the final stages of preparation before listing on the Australian Securities Exchange (ASX) in November with a market capitalization of $145 million, as it ramps up its twin Asian-Oceania throughput expansion strategy.

 

The company, which milks 40,000 cows, plans to raise up to $20 million through the float as it eyes potential acquisition targets among Australia’s dairy farms and processing companies, and as it also plans to concurrently ramp up production in its own dairy business in China.

 

The number of dairy companies listed on the ASX is increasing with Murray Goulburn, Australia’s largest dairy processor raising $500 million after a partial listing in July via a unit trust that allowed non-farmer investors access to a stake in the co-op for the first time, and dairy and seafood company, Beston Global Foods, listing in August.

 

China Dairy Corporation intends to list on the ASX via Chess Depository Interest, which facilitates the listing of offshore companies on the exchange.

 

China Dairy Corp. has five main customers and land rights in connection with 17.4 square kilometers stretching across five locations in north-eastern China. The firm owns its own cows and also has contracts in place with multiple partners giving it access to the production from 40,000 cows as of June 30, 2015. For the 2014/15 fiscal year, the group had revenues of approximately $80 million, according to presentations to potential investors. Tthe pre-IPO valuation of the group is set at $130 million.

 

As is a common theme recently, Dairy Australia has noted in its Dairy Situation and Outlook Report in October, 2015, that free trade agreements, such as the China Australia Free Trade Agreement, and an increase in trade liberalization have created a strongly positive market sentiment. In addition, the report states that private label white milk continues to gain market share away from branded products, gaining 2%, from 61% to 63% on the back of a 2.4% increase in sales volumes, while sales of branded milk fell by 4.3% in volume.

 

Overall, Dairy Australia expects Australian milk production to increase in 2015/16 by 2% to between 9.8 billion and 10 billion liters, after seeing 3.8% growth in production during 2014/15 to 9.7 billion liters.