The company has filed for a Hong Kong IPO, positioning itself as a key beneficiary of growing demand for animal protein as global incomes rise



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<h4>Key Takeaways:</h4>



<ul>
<li>Haid, a spinoff of Chinese agricultural giant Guangdong Haid Group, has filed for a Hong Kong IPO, backed by underwriting majors JPMorgan and CICC</li>



<li>The company sells all of its high-quality animal feed and related products outside China, insulating it from the economic slowdown in its home country</li>
</ul>



As appetites for meat and fish grow globally with rising incomes, companies that supply feed that forms the backbone of modern husbandry and aquaculture can be in pole position to fatten their bottom lines.



One such contender, Haid International Holdings Ltd., is looking to fatten its coffers with a Hong Kong listing, offering investors a technology-focused agricultural business with growing roots in some of the world's fastest-growing markets. The animal feed maker, which has been spun off from Chinese agricultural giant Guangdong Haid Group, made its IPO filing last week, boasting JPMorgan and CICC as underwriters. The hiring of such big-name dealmakers suggests that it's looking to raise a substantial amount from this share sale.



While Haid is among many companies seeking to capitalize on a renaissance for IPOs in Hong Kong, the company stands out from the crowd of nearly 400 current listing applicants for two reasons.



Firstly, Haid wants everyone to know it is all about technology, which sets it apart from conventional agricultural businesses and makes it a part of the fast-expanding agtech sector. The word &#34;technology&#34; appears 130 times in its 536-page IPO document, including in its stated mission of &#34;empowering agriculture with technology.&#34;



Haid's core business doesn't necessarily sound very high-tech, centered primarily on producing feed for aquatic animals like shrimp and fish, as well as chickens and pigs. It offers those under an integrated &#34;breeding-feed-animal health&#34; model, with a goal of offering farmers a one-stop shop for everything from high-quality livestock to optimized feed and products for animal disease prevention. The interconnectedness of these products helps Haid retain customers and enhance its margins.



And technology plays an important role across all three business lines. Advanced broodstock selection and genetic management enable Haid to breed fish and shrimp with improved disease resistance and faster growth rates. The company also uses technology to make feed that better enhances animal health and improve its own production efficiency. In addition, it develops environmental conditioners, probiotics, immune enhancers, and other healthcare products to make animal growth and husbandry more efficient.



Haid is also notable for generating all of its revenue outside China, living up to the &#34;international&#34; part of its name. This insulates the company from changes in economic conditions in China, something a lot of companies in the country want to achieve these days as the nation's economy slows after years of rapid growth and demand for many products softens. In this climate, many Chinese companies are playing up their global expansion plans as an important geographic diversification strategy – something Haid has already done.



<h4>Solid financials</h4>



Haid's global, technology-focused strategy seems to be working, based on its solid financial performance. In the first nine months of last year, its revenue jumped by a third year-on-year to 11.2 billion yuan ($1.6 billion), faster than the 27% annual growth it recorded for all of 2024, when its sales totaled 11.4 billion yuan.



More importantly, the company's profitability has been improving. Its gross profit margin climbed from 12.9% in 2023 to 16.8% in the first three quarters of last year. Citing third-party research in its IPO document, Haid says its procurement costs are below industry averages, while its superior gross profit margin owes to its dual-procurement model, which combines centralized and localized buying strategies, and formulation innovation.



Haid's solid margins make it comfortably profitable, with its bottom line growing much faster than its revenue. In the first nine months of last year, its profit increased 58% year-on-year to 798 million yuan, already well exceeding the figure for all of 2024.



The results show Haid is riding growing demand for animal feed across the world as population expansion and growing incomes boost meat and fish consumption. Particularly, the global market for aquatic feed, Haid's specialty, is projected to grow at an annual clip of 3.9% from 2025 to 2029, the company said in its IPO prospectus, citing third-party research.



Haid's sales are squarely focused on developing markets in Asia, the Middle East and South America. Vietnam is its largest market, accounting for as much as 71% of its total revenue back in 2023. It reduced that proportion to a little less than 60% last year, a result of strategic efforts to better diversify its sales geographically. At the same time, sales in Ecuador and Egypt have grown substantially, together making up more than 20% of Haid's total revenue during the first nine months of last year. The company also has production bases in India, Bangladesh and Indonesia.



But risks for Haid are also abundant, to the point where it dedicated more than 50 pages to this topic in its prospectus. The company is particularly vulnerable to fluctuations in commodity prices, where a spike can quickly erode or even wipe out its margins. Additionally, events like disease outbreaks and natural disasters can devastate its customers, crushing demand for its products.



The company's heavy reliance on Vietnam and just a few other emerging markets also exposes it to a range of risks like regional economic downturns, political instability, currency fluctuations and regulatory changes. Another notable red flag is that Haid settles a significant share of its sales via bank accounts that don't belong to its customers, which it says is a prevalent practice in Vietnam and Egypt. That leaves the company susceptible to potential accusations of fraud, money laundering and tax evasion against both itself and its customers.



Listed companies that are comparable to Haid include New Hope Liuhe (000876.SZ), a large integrated feed and farming business. New Hope's shares have lost nearly 60% of their value in the past five years, probably reflecting investor concerns about China's wobbly economic health that can weaken consumer appetites for meat and agricultural products. But even after the slump, New Hope still commands a lofty price-to-earnings (P/E) ratio of more than 40, although its price-to-sales (P/S) ratio is a dismal 0.3.



Haid isn't reliant on China like New Hope, though it is exposed to many of the similar uncertainties that come with emerging markets. Still, its more diversified geographical outlay, combined with its technology focus, can make it an appealing play on the modernization of animal protein production targeting emerging markets.



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Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.

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Haid International Holdings Ltd., a spinoff of Guangdong Haid Group, has filed for a Hong Kong IPO, aiming to capitalize on the rising global demand for animal protein. Backed by JPMorgan and CICC, the company focuses on technology-driven agricultural solutions, primarily producing high-quality animal feed for aquatic animals and livestock. With all revenue generated outside China, Haid is insulated from domestic economic fluctuations. The company reported a 33% revenue increase to 11.2 billion yuan ($1.6 billion) in the first nine months of last year, with profitability improving significantly.

Haid Files For Hong Kong IPO Amid Growing Demand For Animal Protein