Southern Dairy Actively "Slims Down" to Raise Capital, Refuses to Be a "Money-Grabbing" Enterprise?

Listing | China Visiting Network

Review | Li Xiaoyan

On March 11, the Beijing Stock Exchange announced that the review meeting for Guizhou Southern Dairy Co., Ltd.'s initial public offering (IPO) will be held on March 18. This local Guizhou dairy leader officially reaches a key milestone for its IPO. From the draft prospectus to the meeting draft, the company’s total fundraising amount was adjusted from 980 million yuan to 550 million yuan, a reduction of over 40%. At the same time, pre-IPO cash dividends have attracted market attention. Looking beyond the surface, this adjustment in fundraising is a rational choice based on Southern Dairy’s operational realities and core strategic focus. Coupled with steady performance and a solid regional leading position, the company is approaching the capital market with a more pragmatic and focused attitude, demonstrating a strong foundation for transformation and development of traditional regional dairy enterprises.

This optimized adjustment in fundraising is not due to market concerns about financing difficulties but is a proactive response by Southern Dairy to regulatory inquiries and development needs. Comparing the two versions of the prospectus, the company retained 400 million yuan for the construction of a dairy cow breeding base in Weining County, maintaining its upstream milk source core layout; the fundraising for marketing network construction was reduced from 480 million yuan to 150 million yuan, and the 100 million yuan supplementary working capital project was canceled, reducing total fundraising by 43.88%. Behind this adjustment is the company’s precise assessment of its financial status, project progress, and market environment. In response to regulatory inquiries about the reasonableness of the fundraising, Southern Dairy proactively scaled back non-core funding needs, focusing the funds on milk source base construction and core marketing network development, removing redundant funding requirements. This not only addresses regulatory concerns but also reflects a responsible attitude toward investors, making the use of funds more precise and improving capital efficiency, demonstrating mature capital operation concepts.

With a total of 240 million yuan in dividends before IPO, it may seem contradictory to the expansion of fundraising, but it actually reflects the company’s steady operation and sound governance. During the reporting period, Southern Dairy’s cash dividends accounted for 34.10% of its accumulated distributable profits, with a moderate and compliant dividend payout ratio. As a regional leader with a strong state-owned background, cash dividends are not only a fulfillment of state asset management requirements and a way to reward shareholders but also indicate that the company has ample operating cash flow and solid profitability. Compared to some companies overly relying on fundraising to supplement working capital, Southern Dairy’s ability to pay dividends from its own profits confirms its strong cash-generating capacity, with no signs of a tight capital chain. The company has provided detailed explanations regarding the flow of dividend funds and capital circulation in response to regulatory inquiries, ensuring that dividend activities are legal, compliant, and transparent, further strengthening corporate governance.

In terms of performance, Southern Dairy demonstrates resilience through industry cycles, laying a solid foundation for its IPO journey. From 2022 to 2024 and the first half of 2025, the company achieved revenues of 1.575 billion yuan, 1.805 billion yuan, 1.817 billion yuan, and 854 million yuan, respectively, with net profits attributable to shareholders of 173 million yuan, 200 million yuan, 210 million yuan, and 123 million yuan. Revenue and net profit have steadily grown over multiple years, even under the pressure of the industry in 2024, with slight revenue growth and continuous profit improvement. Notably, the company’s gross profit margin has been rising, from 24.61% in 2022 to 30.74% in the first half of 2025. This increase is attributed to product structure optimization and reduced procurement costs for fresh milk, reflecting excellent cost control and successful product upgrades. The company expects revenue and net profit to grow year-on-year in the first quarter of 2026, continuing its steady development trend and providing strong support for post-listing performance.

As a leading enterprise in Guizhou’s dairy industry, Southern Dairy’s core competitive advantages remain solid, and regional market barriers are difficult to break. The company has deep roots in the Guizhou market, with brands like “Shanhua,” “Huadu Pasture,” and “Guicao” well known locally. In 2024, its market share in Guizhou reached 70.06%, with over 90% of its main business revenue coming from the province, making it the preferred dairy brand in the regional consumer market. In channel layout, the company adopts a combination of distribution and direct sales, with distribution channel revenue gradually optimized. E-commerce and door-to-door delivery of milk are rapidly developing, and an integrated online and offline sales system is increasingly mature. Currently, the company’s products have successfully entered neighboring provinces and cities such as Hunan, Sichuan, Chongqing, and Guangxi, with steady expansion into outside markets. Relying on regional brand influence and channel foundation, the company is gradually opening up growth space in the Southwest market.

Full industry chain deployment is the core support for Southern Dairy to resist industry risks and achieve sustainable development. The company integrates dairy cow breeding, dairy product R&D, production, and sales, with modernized farms upstream to ensure a stable supply of fresh milk; downstream, it covers a full range of products including low-temperature dairy, ambient dairy, and dairy beverages to meet various consumption scenarios. Facing industry challenges such as oversupply and price fluctuations in fresh milk, the company optimizes milk source structure, eliminates low-yield dairy cows, and improves farm operation efficiency to minimize cost volatility. The funds raised will focus on expanding the Weining dairy cow breeding base, further increasing self-supply of milk sources, reducing reliance on external suppliers, and enhancing product quality control and cost advantages from the source. This will complete the “self-sufficient milk source—production and processing—market sales” full industry chain loop.

Of course, Southern Dairy also faces common industry challenges and internal growth issues. The current dairy industry is highly competitive, with national dairy companies leveraging brand and scale advantages to dominate; expansion outside Guizhou still requires ongoing efforts. Price fluctuations and downward pressure on product prices also pose operational challenges. Additionally, issues such as losses from disposal of biological assets and dependence on regional markets need continuous optimization. However, these challenges are not unique but are part of the inevitable process of regional dairy enterprises transforming and upgrading. As the company goes public and its fundraising projects come to fruition, it is expected to gradually overcome development difficulties and unlock new growth opportunities.

This push to the Beijing Stock Exchange marks an important opportunity for Southern Dairy to pursue high-quality development. The revised fundraising plan focuses on core businesses, with 550 million yuan precisely allocated to milk source base and marketing network construction, avoiding idle funds and effectively addressing key industry chain needs. The Beijing Stock Exchange emphasizes serving innovative small and medium-sized enterprises. As a key national leading enterprise in agricultural industrialization and a high-quality local dairy company in Guizhou, Southern Dairy will leverage the capital market to strengthen its industry chain advantages, expand its market footprint, and advance from a regional leader to a nationally recognized specialty dairy enterprise.

From optimized fundraising to steady performance, from regional cultivation to industry chain upgrading, Southern Dairy responds to industry changes with pragmatic actions and consolidates its development foundation through standardized governance. The review meeting on March 18 will not only assess the company’s past achievements but also mark the beginning of a new journey in the capital markets. With its solid regional position, strong profitability resilience, and clear development strategy, Southern Dairy is expected to successfully pass the listing review, harness the power of the capital market to unlock greater growth potential, and inject new momentum into the high-quality development of the regional dairy industry.