Foshan Haitian Flavoring Food Co., Ltd. (Haitian Flavor) has seen its market value evaporate by 480 billion yuan over the past three years, and currently, investors still do not have a positive outlook on its future.
At the beginning of 2019, Haitian Flavor’s stock price was around 30 yuan per share. By the beginning of 2021, its stock price had surged to a peak of 126.2 yuan, quadrupling, and the market value had increased from the initial 160 billion to 701.6 billion. However, in recent years, Haitian Flavor’s stock price has turned downwards. In 2021, 2022, and 2023, the stock price of Haitian Flavor dropped by 31.83%, 16.21%, and 42.28%, respectively.
On April 29, in the A-share market, Haitian Flavor’s stock price closed at 39.57 yuan per share, a decrease of about 70% from its peak.
The reason for the decline in Haitian Flavor’s stock price and the evaporation of its market value was analyzed by the mainland financial blogger “Kan Jian Finance” on April 30, citing fundamental changes as the catalyst for the continuous decline in Haitian Flavor’s stock price. According to the data, Haitian Flavor’s stock price is highly correlated with its performance. In 2020, Haitian Flavor’s stock price rose by 130.55% for the full year, achieving double-digit growth in revenue and net profit, with revenue and net profit reaching 22.79 billion and 6.403 billion respectively, with growth rates of 15.13% and 19.61%.
However, after 2021, Haitian Flavor’s performance growth began to slow down. In 2021, Haitian Flavor achieved revenue, and net profit of 25 billion and 6.671 billion, with growth rates of 9.71% and 4.18%; the growth rate of its performance slid to single digits. In 2022 and 2023, Haitian Flavor continued to experience negative growth, with revenue growth rates of 2.42% and -4.1%, and net profit growth rates of -7.09% and -9.21%, respectively.
The reasons for the decline in Haitian Flavor’s performance include the continuous rise in soybean prices, the raw material for making soy sauce and oyster sauce, and the sluggish restaurant market. In recent years, under the influence of the overall economic environment, consumption has been relatively weak, with offline dining consumption also facing significant impacts.
Statistics show that in 2021, China’s catering revenue was 4.6895 trillion yuan, an 18.6% year-on-year increase, but compared to 2019, the growth was almost zero. The catering channel accounts for 56% of China’s seasoning market sales, with the weakness in dining consumption leading to decreased demand for soy sauce. Haitian Flavor’s dining channel accounts for as much as 60%, and the weak dining consumption has had a significant impact on its performance.
Currently, many institutions are choosing to reduce their holdings in Haitian Flavor. Just considering the northbound funds, as of the closing on April 26, the market value of northbound funds’ holdings was 8.548 billion, while on April 28, 2023, the market value of northbound funds’ holdings reached 23.32 billion.
“Kan Jian Finance” believes that although Haitian Flavor’s performance rebounded somewhat in the first quarter of this year, it has not been recognized by investors, and they remain concerned about Haitian Flavor’s future prospects.
Netizens have expressed opinions on the evaporated market value of Haitian Flavor. A Tencent user commented: “Toxic soy sauce, exporting without carcinogenic additives, domestically with carcinogenic additives, specifically harming domestic consumers.”
Another Tencent user, 9286588, said: “Since the ‘Dual Standard Gate’ scandal, I have never bought products from this unscrupulous company again, calling for everyone to boycott.”
The “Dual Standard Gate” refers to September 2022 when several mainland online media personalities discovered that Haitian soy sauce sold in China contained food additives such as sodium glutamate, trichlorosucrose, sodium benzoate, while a Haitian soy sauce sold in Japan only listed water, soybeans, edible salt, sugar, wheat on its label.
Sodium benzoate in the ingredients list of Haitian Flavor has been explicitly classified as a first-class carcinogen and has been eliminated internationally.
Haitian Flavor is one of China’s largest seasoning manufacturers and one of the first batch of “Chinese Time-honored Brands” announced by the Ministry of Commerce of the People’s Republic of China, mainly producing soy sauce, seasoning sauces, and oyster sauce.
As of April 30, Haitian Flavor closed at 39.26 yuan per share in A-shares, down by 0.78%, with a total market value of 218.3 billion yuan.