China’s baby-formula company to have a second shot at listing in Hong Kong
Jul 08, 2019 (China Knowledge) - China Feihe, the leading domestic baby-formula maker, will have a second try to list its shares in Hong Kong. The company shelved its first IPO plan due to a major acquisition. Feihe didn’t reveal the offer size and pricing of its IPO in the Hong Kong Stock Exchange (HKSE). Bloomberg estimated in March that this company was looking to raise about USD 1 bln.
The company filed for IPO in May 2017 but delayed this plan because it acquired Vitamin World, the third-largest nutritional supplements retailer in the US, in January 2018. Since the previous attempt to IPO, the firm’s revenue has increased by 3 times. Its revenue in 2018 was RMB 10.4 bln, up by 76.5%, and the net profit rose to RMB 2.2 bln, up by 93%.
Chinese customers’ confidence in domestic baby-formula brand has been eroded due to the 2008 baby-formula scandal. This incident led to 6 babies’ death and hundreds of thousands falling ill. Since then, Feihe has been seeking opportunities overseas. A year before its acquisition of Vitamin World which contributed 6% to the firm’s revenue in 2019 Q1, it struck a partnership with Canada Royal Milk and invested USD 225 mln to build a production plant in Ontario, Canada.
The Chinese government has launched measures to prop up the development of domestic baby-formula brands. Tapping into those policies, the company has become more competitive in the market. In 2018, Feihe’s market share was 15.6%, ranking it the first spot. And the company set a sales goal of RMB 15 bln in 2019.
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