"Selling, Selling and Selling" has become the main theme of the development of Yashili, a milk powder company owned by Mengniu. Following the sale of Guangdong's equipment, land, and housing hardware resources at a price of 72.08 million yuan in November last year, Yashili announced again on January 24 that it will sell its milk powder factory.

The assets that were selected for sale by Yashili were Schen (China) Infant Nutrition Co., Ltd. In the memorandum of understanding, Yashili said that the company intends to sell the entire equity of Schen to Ausnutria Dairy (China) Co., Ltd. The reason for the sale is that based on the strategic layout of the group for the next five years, it is hoped that an efficient modern factory layout will be formed by optimizing the production capacity.

However, the Schneider assets sold by Yashili are mainly factories and brand assets are not included. Zhang Peixi, general manager of the Yashili Public Affairs and Media Center, said that the sale of the company is based only at Schein’s factory in Guangzhou. The Shien brand is still operated by Yashili.

“The current infant milk powder company's production capacity is seriously oversupply. This is particularly true of Yashili. Yashili New Zealand's factory was built last year with an additional 50,000 tons of production capacity. Under the background of severe excess production capacity, how to reduce production capacity is Yashili’s top priority.” Dairy Expert Song Liang said.

Indeed, since last year, many infant milk powder companies have had a difficult time. On the one hand, they have excess capacity, and on the other hand, they are in a sluggish market. Yashili is no exception. Earlier, Yashili announced a profit warning announcement to remind investors that the company's 2015 net profit will be significantly reduced by 55% year-on-year. In order to boost performance, “saving food” is inevitable.

In this regard, the relevant person in charge of Yashili did not deny it. He said that Yashili now has seven factories at home and abroad. Although each factory has advanced equipment and first-rate management, it is difficult to bring the advantages of intensification of these factories, and the company has excess capacity, and the sale of the Schneider factory is A reintegration of production capacity.

However, unlike the previous disclosure of the specific sale price, Yashili only stated that Ausnutria will pay the former 10 million yuan in earnest money within 5 working days. The specific selling price was not disclosed. According to Song Liang's observation, the size of the Shien Guangzhou factory was not large, only 30,000 tons at most. While Ausnutria sees the location of the Schneider plant, Yashili deals with the capacity of the factory, so this transaction should be traded at a lower price.

According to Yashili insiders, after the Schen Guangzhou factory was sold, the future Shien brand's production will be handed over to the Ou Shi Meng Niu factory for production. The factory took a total of 1.05 billion yuan in September last year from the parent company Mengniu took over.

According to statistics, Mengniu, which is a joint venture between Mengniu and Nordic milk powder giant Arla Foods, was established in 2006. At that time, Mengniu accounted for 51% of the shares. In 2012, Mengniu’s shareholding through share buybacks increased to 100%. At the beginning of its establishment, Mengniu hopes to enter the high-end milk powder market, but its development did not go smoothly. Whether it is the European style Mengniu or the transfer of Dumex to Yashili with 1.23 billion yuan at the end of last year, Mengniu frequently concentrated all of its milk powder operations under Yashili to reduce the competition among internal brands.

In the context of the highly competitive domestic infant milk powder production cost, Yashili, who has taken over Mengniu's many milk powder businesses, is unavoidable to sort out internal resources and handle duplication of useless resources. This means that the sale of the Schein factory was not the first, nor would it be the sale of the last asset. However, whether Yashili can complete the long-cherished wish of Mengniu to hope to establish its business in milk powder business for many years is not yet available.