AustAsia Group Launches IPO on HKEX 01-30-2023

Recently, AustAsia Group officially launched their initial public offering (IPO). According to the latest announcement given by the company, on December 21, the offer price of the company’s offer shares was set at HK$6.40 (USD 0.82) per offer share. Trading of the shares on the Stock Exchange began at 9:00 am on December 30.

 

AustAsia Group is one of the top five dairy farm operators in China. Since 2009, AustAsia Group has operated a dairy farming business in China. As of June 30 of 2022, its total number of dairy cows reached 111,400.

 

Currently, there are five top dairy farm operators in China, namely Youran Dairy, China Modern Dairy, Yuexiu Huishan, Hebei Leyuan Animal Husbandry, and AustAsia Group. The major shareholders of Youran Dairy, Modern Dairy, Yuexiu Huishan, and Hebei Leyuan Animal Husbandry are Yili, Mengniu, Guangzhou Yuexiu Group, and a wholly-owned subsidiary of Junlebao respectively.

 

AustAsia loses profits despite efficient milk production 

Unlike the other four major dairy farms, AustAsia Group is not fully attached to a certain dairy company. Its controlling shareholder is a private company listed in Singapore, known as Jafa Group Indonesia (JAPF.SI)

 

However, in recent years, the gross profit margin of AustAsia Group has continued to decline. In the first half of this year, its net profit was cut in half. The decrease in price and the increase in costs in the dairy industry are a common problem faced by dairy companies.

 

According to Frost & Sullivan, from 2015 to 2021, AustAsia Group has ranked first in China for all seven consecutive years in terms of the average milk yield per cow. In 2021, the average milk yield of each cow reached 12.7 tons per year in 2021, which exceeded 8.7 tons per year, the average milk yield in the dairy industry, and 11.5 tons per year, the average milk yield of the top five dairy farm operators.

 

Despite profit declines, AustAsia Group remains optimistic

According to the company’s prospectus, from 2019 to 2021, the revenue of AustAsia Group was USD 352 million, USD 405 million, and USD 522 million, respectively, with a compound annual growth rate of 21.9%. The gross profit margins were 34.6%, 37.1%, and 33.7%, respectively. The net profit attributable to the parent company was USD 68 million, USD 96 million, and USD 105 million, respectively, with a compound annual growth rate of 18.4%. However, during the first half of 2022, the revenue of AustAsia did not continue to increase, with net profit cut in half and gross profit margins hitting a new low for recent years.

 

As of June 30, 2022, AustAsia Group achieved a revenue of USD 345 million and a gross profit margin of 24.5%, a decrease of 8.9% from the first half of 2021; the net profit attributable to the parent was USD 30 million, a decrease of 62.72% from mid-2021. In the company’s prospectus, the AustAsia Group attributed the decline in profits to the increase in feeding costs, the decline in the average selling price of raw milk, and the acquisition of the Pure Source Dairy Farm in 2021. This newly acquired dairy farm is still in the growth stage and has a low utilization rate.

 

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


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