Mengniu investors seek HK$1.4b from share sale

Shareholders of China Mengniu Dairy, the mainland's largest milk producer, are raising as much as HK$1.4 billion from the sale of 65 million existing shares, market sources said.

The shares were marketed at an indicative range of HK$20.60 to HK$21.50 each, representing a 4 to 8 per cent discount to the stock's HK$22.40 close yesterday.

ABN Amro Rothschild is arranging the sale.

Mengniu's shares have risen 9.5 per cent this year, compared with the Hang Seng Index's 2.5 per cent gain, and are up 25 per cent since announcing on December 18 three joint ventures with Groupe Danone, the world's biggest yoghurt maker.

Mengniu will hold 51 per cent of the ventures, which will require the two firms to invest a total 1.6 billion yuan and hold about 20 factories.

The company's first-half net profit jumped 39 per cent to 343.43 million yuan as rising sales more than compensated for higher raw material costs. Sales grew 58.7 per cent to 7.55 billion yuan in the six months to June. About 6 per cent of sales came from yoghurt.

Mengniu's share of the China milk market by volume, excluding milk beverages and yoghurt, rose 3.1 percentage points to 31.7 per cent over the six months to June, according to an ACNielsen survey.

Demand for dairy products in China was expected to grow 12.8 per cent a year to 40 million tonnes by 2010, Netherlands-based Rabobank said.