China Feihe Announces Major Subscription of RMB200 Million Financial Product with SPD Bank
Key Highlights for Investors
- Discloseable Transaction: China Feihe Limited (HKEX: 6186) has announced a significant financial move involving the subscription of a major financial product with Shanghai Pudong Development Bank Co., Ltd. (SPD Bank).
- Subscription Details: On 2 March 2026, Feihe HLJ (a wholly-owned subsidiary of China Feihe) subscribed for the “Shangxin Xinyue Fengli Assembled Fund Trust Scheme Phase 268,” utilizing RMB200 million of idle funds.
- Investment Terms: The product is a non-principal guaranteed, floating return financial instrument, primarily investing in fixed income assets, with an expected annual return rate of 2.50%. The maturity date is set for 7 December 2026.
- Aggregate Exposure: The total outstanding principal amount of wealth management and structured deposit products subscribed by the Group from SPD Bank has now reached RMB2.9 billion.
Details of the Transaction
The management of China Feihe states that the consideration for this subscription was determined on commercial terms, following arm’s length negotiations with SPD Bank. The primary factors considered were the Group’s available surplus cash for treasury management and the expected returns and terms of the product.
The strategic rationale for this investment is to utilize temporary idle funds in a way that enhances capital gains, while maintaining a prudent approach to capital safety and liquidity. The Directors believe the associated risk is low compared to typical savings or time deposits offered by other commercial banks in the PRC, making this product a more attractive option for surplus cash management.
Implications for Shareholders and Potential Price Sensitivity
- Impact on Capital and Operations: The Company assures that robust internal controls are in place, ensuring the investment does not adversely affect working capital, daily operations, or dividend payments. The investment is positioned as a low-risk, higher-yielding alternative for idle funds, safeguarding shareholder interests.
- Listing Rules Compliance: Under Hong Kong Listing Rules, the aggregation of this and prior SPD Bank product subscriptions means the highest percentage ratio for these transactions now exceeds 5% but is less than 25%. This triggers a “discloseable transaction” classification, requiring notification and public announcement, but not shareholder approval.
- Independence of SPD Bank: SPD Bank and its ultimate beneficial owners are confirmed as independent third parties, with no connected relationship to the Company or its related parties.
- Potential Price Sensitivity: The increase in aggregate investment exposure to RMB2.9 billion in non-principal guaranteed, floating return products could be price sensitive. The higher risk profile compared to traditional bank deposits, coupled with the scale of exposure, may influence market perception, especially if market conditions for fixed income assets change or if there are any adverse developments in the investment products.
Company and Counterparty Information
- China Feihe Limited: Incorporated in the Cayman Islands, listed on the Main Board of HKEX, and primarily engaged in the production and sale of dairy products, raw milk, and nutritional supplements.
- SPD Bank: A leading joint stock commercial bank listed on the Shanghai Stock Exchange, offering a range of financial and investment products.
Board Composition
The Board of China Feihe comprises a mix of executive, non-executive, and independent non-executive directors, including Chairman Mr. Leng Youbin, ensuring a diverse and balanced governance structure.
Conclusion
This sizeable allocation of idle funds into a non-principal guaranteed financial product with floating returns marks a strategic effort by China Feihe to optimize treasury yields. However, shareholders should note the increased exposure to such products, which, while yielding above-market returns, carry a certain degree of investment risk that could be market sensitive depending on future economic developments.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors are advised to consult their own financial advisors and to review the Company’s public disclosures and announcements for comprehensive information before making any investment decisions. The information herein is based solely on public disclosures by China Feihe Limited as of the date of this report.
