Foreign-controlled Charoen Pokphand Seeds rushes toward IPO: Nearly three decades of localized cultivation, production capacity digestion awaits testing

A foreign-invested company that has been deeply involved in China’s corn seed industry for nearly 30 years is about to迎来 an important moment in the capital market. Xiangyang Zhengda Seed Industry Co., Ltd., controlled by Thailand’s Chia Tai Group (CP Group), will soon have its IPO application reviewed by the Beijing Stock Exchange Listing Committee. If approved smoothly, this company will become another listed corn seed company on the Beijing Stock Exchange, providing a unique case study of foreign investment participation in China’s seed industry development.

Zhengda Seed Industry’s origins date back to 1921. That year, Thai patriot and overseas Chinese leader Xie Yichu founded “Zhengda Seed” in Bangkok, laying the foundation for the group’s subsequent development centered on seeds. In 1996, the first foreign-invested seed enterprise invested by Chia Tai Group in China—Xiangyang Zhengda Agricultural Development Co., Ltd.—was officially established, later restructured as a joint-stock company. The company chose Xiangyang, Hubei, aiming to fill the gap of large seed companies in central and southern China at the time.

Unlike some foreign companies that “research abroad, produce locally,” Zhengda Seed Industry has adhered to a deep localization strategy since its inception. The company not only invests all high-quality germplasm resources into the Chinese market but also has built a comprehensive R&D system covering the four major corn-producing regions: Eastern North China, Huang-Huai-Hai, Southwest, and Northwest. It has established 10 breeding stations nationwide. Among them, the Xishuangbanna station focuses on tropical germplasm research, the Changchun station serves the Northeast market, and the Xiangyang station leverages fully automated intelligent greenhouses to enable three to four generations of breeding per year, significantly improving breeding efficiency.

After nearly 30 years of development, Zhengda Seed Industry has grown into a modern seed enterprise integrating R&D, breeding, production, and sales, with over 95% of its revenue coming from corn seed business. As of June 30, 2025, the company had obtained 67 plant variety rights and had 74 approved varieties on sale. Its自主选育的F06、F19 corn inbred lines have been selected as “National Outstanding Contribution Corn Inbred Lines” and are among the most widely used core inbred lines in Southwest China. Its flagship variety “Zhengda 808” was also included in the Ministry of Agriculture and Rural Affairs’ 2023 “National Crop Excellent Variety Promotion List” as a “backbone promotion variety,” with multiple varieties becoming leading local agricultural varieties known for stable high yields and excellent resistance, earning farmers’ long-term trust.

Financially, Zhengda Seed Industry’s performance has shown some fluctuations. From 2022 to 2024, the company’s operating revenue was 319 million yuan, 409 million yuan, and 380 million yuan, respectively, with net profits of 94.69 million yuan, 88.43 million yuan, and 81.13 million yuan, showing a declining trend. In 2025, the company’s performance experienced a “profit increase without revenue increase,” with operating revenue decreasing by 5.12% to 361 million yuan, but net profit rising by 11.85% to 90.75 million yuan.

In terms of profitability, Zhengda Seed Industry exhibits characteristics different from its peers. In 2024, the company’s overall gross profit margin was 40.71%, with the corn seed business gross margin at 41.2%, higher than the industry average of 32.81% (such as Longping High-Tech, Denghai Seed, etc.) by 8.4 percentage points. Especially in Southwest and South China, gross margins reach around 50%. The company explains that this phenomenon is related to downstream customers being mostly small and medium-sized farmers with weaker bargaining power, and the local climate’s complexity and variability requiring specific variety performance.

For this IPO, Zhengda Seed Industry plans to raise 283 million yuan, all of which will be used for the construction of the Yunnan Zhengda Seed Processing Center and the second phase of the Zhangye Zhengda CP Group Corn Seed Processing Project. The funds will focus on enhancing seed processing, storage, and quality inspection capabilities, aiming to strengthen the company’s supply advantages in the Southwest market and establish supply chain barriers along the Northwest golden seed production belt. After completion, the company’s annual processing capacity will increase from the current 30,000 tons to 40,000 tons.

However, the regulatory authorities have paid close attention to the reasonableness of the company’s fundraising projects and the risks of capacity utilization. Data shows that from 2022 to 2024, Zhengda Seed Industry’s capacity utilization rates were 63.12%, 66.05%, and 59.94%, respectively, indicating relatively low utilization. In the first half of 2025, capacity utilization dropped sharply to 18.43%. The company explains that corn seed production and processing have significant seasonal characteristics. Because seeds have high moisture content immediately after harvest, processing and storage must be completed within a short period to prevent mold, sprouting, and other quality risks. As a result, capacity utilization exhibits a “phase saturation” and “long-term idle” coexistence. For example, during the peak processing seasons in November and December at Yunnan and Zhangye bases, utilization can exceed 200%, while in other months it is very low or zero. The company believes that this seasonal fluctuation leading to an average annual capacity utilization rate is a common industry phenomenon.