A corn seed business is demonstrating its significant market potential. As a "breeding, propagation, and promotion integrated" corn seed enterprise under the Charoen Pokphand Group, Xiangyang Chia Tai Seed Co., Ltd. (referred to as Chia Tai Seed) is accelerating its IPO process and is scheduled for deliberation by the Beijing Stock Exchange's listing committee on March 13.
This IPO move by Chia Tai Seed, another strategic piece in CP Group's agricultural and animal husbandry layout in China, reflects the confidence of Thailand's Chearavanont family in deepening their investment in the Chinese market. However, it also faces multiple challenges including fluctuating performance, controversy over its distribution model, and restrictions on its genetically modified (GM) business.
Chia Tai Seed is a seed company primarily engaged in the research and development, production, and sales of corn seeds, covering the entire industrial chain. Despite nearly three decades in the industry, its recent financial performance shows a volatile downward trend. From 2022 to 2024, the company's operating revenues were 3.19 billion yuan, 4.09 billion yuan, and 3.8 billion yuan respectively, while net profits were 94.694 million yuan, 88.4316 million yuan, and 81.1331 million yuan, indicating a clear decline. In 2025, operating revenue reached 3.61 billion yuan, a decrease of 5.12% year-on-year, but net profit attributable to shareholders increased by 11.85% to 90.7471 million yuan, showing a pattern of profit growth without corresponding revenue growth.
The company's business is mainly divided into two segments: sales of proprietary seed varieties, and technical services for seed propagation and production commissioned by others. Sales of proprietary varieties form the core of the business, consistently accounting for over 90% of primary business revenue. Between 2022 and 2025, revenue from the seed business constituted 98.36%, 88.07%, 94.9%, and 98.44% of primary business revenue respectively, almost entirely from corn seeds. The profitability of this model is highly dependent on seed production costs. The 11.85% increase in net profit attributable to shareholders in 2025 was primarily driven by a reduction in these production costs.
The commissioned propagation business, the second-largest segment, has experienced significant revenue volatility. In 2022, the company did not conduct this business, with related transactions handled by affiliate Zhangye Guda. To enhance the independence of the listing entity and avoid同业竞争, the company took over this business from Zhangye Guda in 2023, generating revenue of 39.9322 million yuan that year. In 2024, focusing on its core operations and more precise land-use planning, the company proactively reduced commissioned propagation revenue to 15.584 million yuan, a decrease of 60.97% year-on-year. By 2025, it further scaled back this business, with projected annual revenue of only about 970,000 yuan. This strategic reduction is one reason for the decline in overall revenue. The company stated in its prospectus that the revenue drop is mainly due to proactively reducing commissioned propagation business and prudently estimating post-period return rates, while profit growth benefited from lower production costs.
Another factor impacting revenue is a policy restriction. The ultimate controlling shareholder behind Chia Tai Seed is Charoen Pokphand Group. Due to CP Group's foreign background, Chia Tai Seed is prohibited from directly engaging in the selection, breeding, and seed production of genetically modified corn varieties. The impact of this restriction is evident in the change of a key client. Public information shows that Shanxi Sanlian Modern Seed Technology Co., Ltd. was once the company's largest customer, with transactions totaling 26.615 million yuan in 2023. However, by 2024, this figure plummeted to 156,400 yuan, becoming almost negligible. The core reason was Shanxi Sanlian shifting its focus to GM seed collaborations, an area Chia Tai Seed cannot participate in due to policy constraints.
Regarding this limitation, Chia Tai Seed commented that currently, the number of GM corn seed varieties in China is limited, the promotion area is insufficient, and technological levels lag significantly behind other countries. It noted that corn seed breeding involves multiple technical approaches. From a policy perspective, GM corn in China is still in a pilot phase, and commercially, its adoption is objectively a gradual process. The company further stated that with rising consumer health consciousness and increasing focus on healthy diets, food products meeting these demands are favored. As healthy eating becomes a global trend, whether GM products can satisfy consumer needs remains to be tested by the market. While restricted in GM biotechnology breeding, the company believes the current impact on its performance is relatively limited, considering the planting performance of GM varieties, industrial policies, the R&D progress of comparable companies, and consumer acceptance levels.
In the seed industry, distributors are the critical link between companies and farmers. However, Chia Tai Seed's distribution model has become a focus of regulatory inquiry due to its specific and traditional characteristics. According to the prospectus, from 2022 to 2024, and the first half of 2025, revenue from the distribution model was 300 million yuan, 345 million yuan, 340 million yuan, and 76 million yuan respectively, accounting for 97.69%, 97.73%, 96.27%, and 90.19% of operating revenue.
The prospectus discloses that at the end of the reporting period, Chia Tai Seed had over 1,600 distributors, forming a sales network covering China's major corn-producing regions. However, the quality of this network has a notable weakness – a pronounced "grassroots characteristic." Approximately 97% of the distributors are individuals or individual businesses, with corporate distributors comprising only 3%, indicating a highly fragmented channel structure. While not uncommon in the industry, this structure inherently poses challenges for revenue recognition. More notably is the ordering method: distributors often place orders via phone or WeChat with sales staff, who then enter them into the system, lacking formal written documentation.
Chia Tai Seed explained that its downstream clients are primarily small, dispersed seed distributors and retailers. Given the low unit price of seeds and the large number of customers, individual transaction amounts are relatively small and geographically widespread. Constrained by clients' level of informatization and the seasonal, time-sensitive nature of agricultural production, distributor clients commonly place orders with sales personnel via phone or WeChat. This transaction model is standard practice in the industry, aligns with the client structure characteristics and transaction habits, and has strong commercial rationality and prevalence. Additionally, the issuer maintains long-term, stable cooperative relationships with major distributor clients, minimizing risks of wrong or missed shipments due to unclear phone/WeChat communication or improper execution.
This "informal" transaction model directly raised regulatory concerns about the authenticity of sales revenue, becoming the only topic queried twice across two rounds of inquiries. The Beijing Stock Exchange requested the company to supplement explanations regarding the authenticity of distribution revenue and the sufficiency of verification. These concerns are not unfounded. For the 2021-2025 sales seasons, the company's overall return rates were 4.95%, 8.82%, 11.65%, and 13.74% respectively, with return amounts surging from 8.8296 million yuan to 57.4084 million yuan. Concurrently, the ending inventory held by the top five distributors continued to rise.
Chia Tai Seed attributed the rising return rates from the 2022 to 2025 sales seasons to a combination of three factors: a recovery in industry supply easing in 2022-2023 leading to a natural rebound in return rates in the Southwest region and a sharp increase in the Northwest market due to intensified competition; a continuous decline in corn prices starting in the second half of 2023, cumulatively falling about 700 yuan/ton by the end of 2024, severely dampening planting enthusiasm and causing a 36% year-on-year surge in returns in Q3 2024; and prices hitting near five-year lows in 2024-2025, coupled with rare droughts in Yunnan and other areas, which hindered summer planting and further increased return pressure. Regarding the ending inventory, the company stated it employs a payment-before-delivery credit policy, requiring distributors to have sufficient working capital for purchases. If the company engaged in maliciously forcing distributors to buy more product, the high cooperation costs would lead weaker distributors to cancel cooperation. Operating data shows that continuously transacting clients form the major part of the company's performance, with their revenue share stable at over 80% during the reporting period and cooperation remaining sound, indirectly proving the absence of channel stuffing to manipulate performance.
Behind Chia Tai Seed lies the vast business empire of Thailand's Chearavanont family. In 2025, the family ranked among the world's 25 wealthiest families with a fortune of 375.3 billion yuan. The CP Group, built by the family, spans three core sectors – agribusiness and food, wholesale and retail, and telecommunications and television – and also ventures into over 10 other industries including finance, real estate, pharmaceuticals, and mechanical processing. In 2024, CP Group's global sales reached 102.2 billion US dollars, approximately 7 trillion yuan.
The Chinese market holds a pivotal position in this global layout. By the end of 2024, CP Group had established 670 enterprises in China, with the Chinese market contributing over 2 trillion yuan in revenue that year. From feed and breeding to food processing and retail, the Chearavanont family has built a complete "from farm to table" industrial chain in China.
In capital markets, CP Group has already made moves. Currently, the group controls the Hong Kong-listed company SINO BIOPHARM (01177.HK). It is worth noting that this is not CP Group's first attempt to list a company on the A-share market. Previously, it sought an IPO for Chia Tai Company on the Shanghai Stock Exchange Main Board. That company, engaged primarily in hog farming and feed production, is a core enterprise of the group's agribusiness and food segment. However, that IPO plan was voluntarily withdrawn in September 2023, ultimately terminating the review, with specific reasons undisclosed.
Now, Chia Tai Seed represents the group's latest move in the A-share market. The company plans to raise 283 million yuan, mainly for the Yunnan Chia Tai Seed Processing Center construction project and the second phase of the Zhangye Chia Tai Charoen Pokphand Seed Co., Ltd. corn seed processing project. Compared to the initial application, the total fundraising amount was reduced from 363 million yuan, and the originally planned "Xiangyang Core Testing Station Construction Project" was removed.
More notably, as the company pushes for its IPO, there has been significant activity at the group level: a 200 million US dollar strategic investment in Muyuan Foods' Hong Kong listing in February 2026; the signing of a 1.4 billion yuan layer hen full-industry chain project at the end of 2025; and the appointment of Hou Xiaohai, former CEO of China Resources Beer, as Chief Operating Officer for China, aiming to strengthen the C-end market. These moves indicate the Chearavanont family is orchestrating a larger-scale synergy between capital and industry in the Chinese market.
For Chia Tai Seed, balancing group strategy with the independent development of a listed company, competing in the era of genetic modification, and mitigating compliance risks associated with its distribution model are new challenges facing the Chearavanont family. The review on March 13th will be the first formal test of their approach to these challenges.
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