Yihai Kerry’s IPO to stimulate grain and oil industry to speed up consolidation

On July 12, the China Securities Regulatory Commission released the prospectus of Yihai Kerry Jinlongyu Grain and Oils. The company plans to issue no more than 572 million shares and expects to raise no more than 13.87 billion RMB for comprehensive kitchen food project and cooking oil projects. Yihai Kerry is one of the largest grain and oil processing enterprises in China, with revenue of 133.494 billion RMB, 1507.66 billion RMB and 167.074 billion RMB in 2016, 2017 and 2018.
 
The capital raising by Yihai Kerry will alleviate the company's shortage of production capacity during the peak sales period, and effectively improve the company's kitchen food production scale and further enhance its market competitiveness. For the whole industry, the listing of Yihai Kerry will bring greater pressure to small and medium-sized enterprises, because the grain and oil market is generally easy to be basically saturated. Yihai Kerry will continue to seize market share to a greater extent, further accelerating the speed of industry integration.
 
Yihai Kerry’s IPO has exposed the problem of low profit margins in the grain and oil industry. One of the reasons is the serious homogenization of products and fierce competition. Yihai Kerry is the enterprise with the most abundant product variety system in the current industry, but there are no barriers to products. There are a large number of competitive products in every level of products, and the quality differentiation is not prominent enough. The listing will help Yihai Kerry in market expansion, improving its product competitiveness and new products R&D and promotion. It can also further enrich the types of competitive products through mergers and acquisition, so as to promote the level of competition in the whole industry and optimize the industrial environment to some extent.