Can New Hope Dairy out-milk Mengniu and catch up with Yili?

Liu Yonghao, harkening from China’s first generation of millionaires, is preparing to take his dairy company public in Hong Kong

Key Takeaways:

• New Hope Dairy has filed to list in Hong Kong, reporting revenue of 11.2 billion yuan last year
• The company ranked fifth in China’s market for liquid dairy products in 2025

By Lau Chi Hang

The name Liu Yonghao may not register with many younger Chinese, who idolize more contemporary entrepreneurs like Wang Tao, founder of leading drone maker DJI. But back in the 1990s when China’s economy was just taking off, Liu earned frequent spots on lists of the country’s newly super-rich, putting him squarely at the center of China’s earliest generation of leading entrepreneurs.

Fast forward to the present, when many wealthy individuals from that time have retired, faded into obscurity or sometimes worse after being accused of financial crimes. But Liu has stood apart, retaining a significant place at the China Inc. table even if he no longer commands the same prominence. Now, he’s hoping to splash back into the headlines by listing his dairy operation, New Hope Dairy Co. Ltd. (002946.SZ), which applied for a Hong Kong IPO this month.

From modest beginning

Born in Southwest China’s Sichuan province in 1951, Liu and his brothers sold off family assets to raise 1,000 yuan back in 1982, just four years after the country began implementing market-oriented reforms. They used the sum, worth about $500 at the time and equal to more than a year’s salary for most people, to start a business focused on feed, breeding and agriculture. The operation quickly grew through their diligence, and they founded their Hope Group in 1992. After the brothers divided their assets in 1995, Liu set up his own New Hope Group (000876.SZ), which listed on the Shenzhen Stock Exchange in 1998.

Liu went on to establish New Hope’s dairy division in 2001, and formally registered New Hope Dairy in 2006. The company quickly scaled up through mergers and acquisitions, and followed its parent company with its own listing on the Shenzhen Stock Exchange in 2019.

New Hope Dairy produces and sells dairy products in two main categories: liquid dairy products, including low-temperature milk and yogurt, as well as ambient liquid dairy products; and milk powder products. Liquid dairy is its bread-and-butter, accounting for 93.4% of its sales last year. Within that segment, low-temperature dairy products contributed 53.8%, while ambient-temperature contributed 39.6%.

The company’s revenue has been somewhat uneven lately, falling from 11 billion yuan ($1.61 billion) in 2023 to 10.67 billion yuan in 2024, before rebounding to 11.23 billion yuan last year. Its overall gross margin last year was about 29.2%, up 0.8 percentage points from 2024. Its profits over the three-year period have been steadier, rising from 438 million yuan in 2023 to 549 million yuan in 2024, and further to 754 million yuan last year.

China’s dairy market has been consistently led by bellwethers Yili Industrial (600887.SH) and Mengniu (2319.HK). New Hope Dairy’s new Hong Kong listing is likely aimed at leveraging capital markets to enhance its financing capabilities to help it better compete with that dominant duo and several other major players over the longer term.

Inferior fundamentals

Despite its entrepreneurial roots, New Hope Dairy faces formidable challenges in its ambition to overtake Mengniu and catch up with Yili due to its shallower roots in China’s vast dairy market. Compared with the two industry titans that are laser focused on their core business, New Hope Dairy is only one segment of a larger conglomerate whose operations cover a wide range of agricultural and husbandry services. Its dairy division is relatively young, and its current scale owes mostly to acquisitions rather than organic expansion.

By comparison, Yili has 70 years of history, while the younger Mengniu has 30 years. Both companies have focused exclusively on dairy from their inception, establishing deep roots within the industry. Their sustained growth is the result of long-term experience and accrued expertise developed over decades.

Scale limitations and regional constraints

In terms of scale, New Hope Dairy’s revenue of 11.2 billion yuan last year is far less than Mengniu’s 82.2 billion yuan and Yili’s figure exceeding 100 billion yuan, making it harder to compete against such vastly bigger rivals. The two giants have achieved such scale on the back of well-established national networks. By comparison, New Hope Dairy, despite its 20 years of history, remains regionally focused in its home Sichuan province, as well as surrounding Yunnan and Chongqing.

Within China’s liquid dairy product market last year, New Hope just barely managed to crack the top five. The top spots were held by Yili and Mengniu, commanding 30.3% and 27.2% of the market, respectively. They were followed by Bright Dairy (600597.SH) and Junlebao Dairy, at a distant third and fourth with 6.2% and 5.7% of the market. New Hope Dairy ranked fifth with less than 5%.

While New Hope Dairy emphasizes its status as the fastest-growing player in the low-temperature liquid dairy products segment, investors should note that its smaller scale and lower sales base make it easier to achieve such higher growth rates. The opposite is true for rivals with larger sales volumes, which naturally appear to trail New Hope purely in terms of growth rates.

Threat from market leaders

What’s more, the low-temperature dairy segment that is New Hope Dairy’s strong suit is now facing intensified challenges from Yili and Mengniu, which are stepping up their investments in the area. Yili offers its Satine and MilkZi brands in the segment, while Mengniu has its Shiny Meadow brand, all utilizing low-temperature pasteurization technology to preserve the nutritional value and taste of fresh milk. Crucially, the two industry leaders have access to vast financial resources, extensive nationwide sales networks, and sophisticated supply chains to build their positions in new product areas they enter. That could translate to a substantial threat to New Hope Dairy’s position in the low-temperature dairy market.

While Hong Kong’s IPO market has been hot over the past year, investor enthusiasm has been largely concentrated on technology stocks, with consumer stocks failing to capture similar favor. Hong Kong-listed Mengniu trades at a price-to-earnings (P/E) ratio approaching 40 times, while Yili’s Shanghai-listed shares trade at about 20 times. Given that New Hope Dairy’s scale is significantly smaller than either of those leaders, a reference P/E multiple of around 15 times might be more suitable, suggesting a potential market valuation of around HK$10 billion ($1.46 billion).

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