【环球时报】Seeking financing for larger market share

　　Heilongjiang-based Feihe Dairy, a domestic producer and distributor of milk powder products in China, announced yesterday that the management just celebrated its New York Stock Exchange (NYSE) listing under the name of American Dairy Inc (ADY) with a bell ringing ceremony on Tuesday.

　　The marketing staff of Feihe Dairy, headquartered in Beijing, confirmed the listing yesterday.

　　“The listing on the NYSE main board provides a bigger platform for Feihe Dairy’s further financing and development,” said Chen Chen, chief analyst of food industry at Shenzhen Zhongzhe Investment Consulting.

　　Both Sequoia Capital’s recent private placement with American Dairy and their listing on the NYSE main board convey a message that Feihe Dairy is trying to enlarge its market share by strengthening financing and increasing brand awareness, according to Chen.

　　American Dairy signed an agreement with Sequoia Capital on August 12 to issue 2.1 million shares of its common stock to the American venture capital firm in exchange for an aggregate purchase price of $63 million.

　　Though American Dairy achieved total revenues of $155 million in the first half of this year, up 102.8 percent year-on-year, the growth slowed down to 10 percent in the second quarter compared to the same period last year, according to data from American Dairy’s recent filing with the Securities and Exchange Commission.

　　“Feihe Dairy witnessed high sales growth after the milk powder scandal of Sanlu Group and other powder producers was revealed in September 2008,” Chen added, “Chinese consumers started to turn to those not on the blacklist published by the regulators, and Feihe benefited from it.”

　　However, the high growth was unsustainable and slowed down in the second quarter, Chen recounted. With the collapse of Sanlu Group, the milk powder market was reshuffled. Over 80 percent market share is currently held by foreign brands, according to Chen.

　　“Feihe Dairy currently holds about 7 percent of the domestic market share for milk powder.” Chen remarked.

　　Feihe Dairy is under great pressure from its domestic competitors who are tapping into its core mid- to high-end market, Chen said.

　　Originally a State-owned enterprise founded in 1962, Feihe Dairy was privatized in 1997 under Leng Youbin, the current Chairman and CEO. Leng registered American Dairy Holdings in Delaware in 2002 as the US arm of Feihe Dairy.

　　In May 2002, American Dairy Holdings bought a US shell company named Lazarus Industries Inc that was listed on a smaller stock exchange, the over-the-counter bulletin board (OTCBB).

　　American Dairy Holdings later acquired Feihe Dairy and renamed itself American Dairy Inc. By doing so, Feihe Dairy was successfully listed via American Dairy Inc on the US stock market under the symbol ADY.

　　American Dairy Inc, the holding company of Feihe Dairy, was later listed on the NASDAQ in May 2003 and became the first Chinese dairy producer ever listed in the US, according to Chen.

　　It later successfully transferred to NYSE Arca for small and medium firms in April 2005 and was finally listed on the NYSE main board Tuesday.

　　原文发布地址：http://www.globaltimes.cn/www/english/business/china-markets/2009-08/459276.html（环球时报）