Sanyuan Co., Ltd. agrees to transfer its 18 percent Gansu Sanyuan equity at a listing price of 1 RMB 07-20-2022

On June 17, Sanyuan Group announced that after deliberation of its board of directors, the company approved a decision to transfer its 18% equity in Gansu Sanyuan Dairy Co., Ltd. (Gansu Sanyuan) at a listing price of 1 RMB (USD 0.15). Gansu Sanyuan is 62% owned by Gansu Heihe Hydropower Industrial Investment Co., Ltd. (Heihe Hydropower), 18% owned by Sanyuan Group, and Zhangye Modern Agriculture Investment Co., Ltd. holds the remaining 20% of the shares. According to its 2021 annual report, Sanyuan Group has invested RMB 18 million (USD 2.7 million) in Gansu Sanyuan.

In 2016, in order to expand and cultivate new markets and enhance the popularity of the Sanyuan brand in the northwest market, Sanyuan Group established a joint venture company, Gansu Sanyuan, with Heihe Hydropower and Zhangye Agricultural Investment in Ganzhou District, Zhangye City, Gansu Province.

Qixinbao, a Chinese information query tool, shows that Heihe Hydropower is 90% owned by Ganzhou District Financial Security Service Center and 10% owned by Gansu Provincial Department of Finance. Furthermore, Zhangye Agricultural Investment is 52% owned by Zhangye State-owned Assets Management Office, and CDB Development Fund Co., Ltd. holds 20% of the shares.

Gansu Sanyuan has a registered capital of RMB 100 million (USD 14.9 million), and Heihe Hydropower contributed 62 RMB million (USD 9.25 million) in cash, accounting for 62% of the registered capital. In addition, Zhangye Agricultural Investment invested RMB 20 million (USD 2.98 million) in cash, accounting for 20% of the registered capital. Furthermore, Sanyuan Co., Ltd. invested RMB 18 million (2.69 million), 18% of the registered capital.

Gansu Sanyuan constructs new dairy plant

After Gansu Sanyuan was established, the company began construction on a new dairy processing plant, which was completed in 2017. The company uses the Sanyuan trademark to produce and sell Sanyuan brand pasteurized milk, fermented milk, sterilized milk, modulated milk, dairy beverages, and other dairy products.

At the beginning of 2018, Gansu Sanyuan built a new processing production line with a daily processing capacity of 500 tons of raw fresh milk and an annual output of 180,000 tons, covering an area of about 10 hectares, with an estimated total investment of RMB 456.8 million (USD 68.2 million).

At the time of building its new dairy processing plant in 2018, Gansu Sanyuan expected to achieve annual sales revenue of more than RMB 550 million (USD 82.0 million), an annual profit of RMB 100 million (USD 14.9 million), and the company expected to owe RMB 70 million (USD 10.4 million) in taxes within the first 3 to 5 years of production. After the company’s project is completed and reaches production standards, the company expects to achieve an annual sales income of more than RMB 1.2 billion (USD 179 million).

The successful construction of the project will not only play a role in increasing efficiency and income in the livestock industry and fresh milk production, but it will also greatly promote the development of related industries such as logistics.

Sanyuan Group to release Sanyuan dairy brand after transaction

As of September 30, 2021, Gansu Sanyuan's total assets were RMB 202 million (USD 30.1 million), and its appraised value was RMB 224 million (USD 33.4 million). The value of the company’s liabilities is RMB 235 million (USD 35.0 million).

After the completion of this transaction, Sanyuan Group will no longer hold the equity of Gansu Sanyuan, and it will release the relevant authorization of the Sanyuan brand.

For more information, please check our Dairy Products China News.

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