Shares in China Dairy Corporation lifted 25 per cent in a strong debut on the Australian share market.
China Dairy shares closed five cents, or 25 per cent, above their 20c issue price on Friday, with the stock ranging as high as 27 cents during the day as about 1.5 million shares were traded.
China Dairy wants to expand its milk supply operations into Australia to meet the insatiable demand for fresh milk, particularly for infants, in its homeland.
“Australians well understand the immense appetite Chinese consumers have for its highly regarded dairy products, and we see this market as offering considerable growth underpinned by the rapidly urbanising Chinese population,” China Dairy chief executive Youliang Wang said in a statement on Friday.
Australia is the company’s first offshore foray and may involve the acquisition of Australian farmland, cows, dairy producers, and technology.
In its prospectus, China Dairy said it would explore acquisitions of dairy farming and dairy processing operations in both China and Australia as a mid-to-long-term strategy.
In Australia, China Dairy will explore the acquisition of dairy processors of high-quality products and search for dairy farming operations which would allow the group to improve its farming processes and technologies.
When China Dairy signalled its intention to enter the Australian market in November, United Dairyfarmers of Victoria welcomed the move, saying the local industry needed money to upgrade farms and processing facilities.
China Dairy says the Chinese dairy industry can’t keep up with demand by relying solely on domestic resources.
The Chinese government’s decision to end the one-child policy is expected to drive up demand for fresh milk and infant formula even further.
Demand for dairy products in China is expected to rise 38 per cent by 2022.
China Dairy’s operations are located in China’s northern Heilongjiang province and has more than 40,000 cows, making it a significant player in the dairy sector there.