New Hope Liuhe, a major Chinese agrifood enterprise, has raised USD 137 million by divesting eight non-core subsidiaries, including stakes in Qingdao Big Herdsman Machinery and other dormant feed and livestock entities. The restructuring is part of a strategic pivot to prioritize core operations like feed production and pig farming, reduce debt, and enhance financial stability. This realignment highlights broader trends in China’s agribusiness sector, focusing on operational efficiency and innovation amid fluctuating markets
New Hope Liuhe Co., Ltd., one of China’s prominent agrifood companies, has announced the sale of stakes in eight subsidiaries, generating over CNY 1 billion (USD 137 million). The move aligns with the company’s strategic shift to concentrate on core operations, such as feed and pig farming, while reducing debt and bolstering financial sustainability.
Key Transactions in the Restructuring
Among the most significant sales are:
- Qingdao Big Herdsman Machinery Co.: New Hope’s nearly 26% stake in this leading livestock equipment manufacturer has been sold to New Hope Investment Group Co. for CNY 398 million (USD 54.4 million). Big Herdsman recorded nearly CNY 2.1 billion (USD 287 million) in revenue for 2023, with a net profit of CNY 154 million (USD 21 million).
- Minsheng Insurance: A 3.4% stake will be sold to Lhasa Economic Development Zone Xinlu Industrial Co. Ltd for CNY 417 million (USD 57 million).
- Dormant Feed and Livestock Subsidiaries: Shares in six inactive entities are planned to be transferred to Hainan Jinlin Investment Co. for CNY 194 million (USD 26 million). These subsidiaries, primarily generating revenue through property rentals, reflect New Hope’s strategic pivot away from non-core operations.
The Strategic Rationale
The divestments are expected to improve liquidity and reduce financial leverage—key steps toward securing long-term growth. As of Q3 2024, the company reported a net profit of CNY 150 million (USD 20.5 million), marking a recovery from earlier losses. Its debt-to-asset ratio improved to 71%, down from 74% at the start of the year. By year-end, New Hope aims to bring this ratio below 70%, with further reductions planned to reach 65% in 2025.
By narrowing its focus to core segments like feed production and pig farming, the company is positioning itself to weather industry challenges while ensuring sustainable growth.
New Hope’s restructuring reflects a broader trend in China’s agribusiness sector, where major players are optimizing operations to navigate volatile markets and tighter margins.
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