Haitian’s Profit Growth Strong in Q3, but Shares Are Overvalued

Foshan Haitian Flavouring and Food is a leading firm for both market share and profitability in China’s condiment and flavoring industry. It was established in 1955, but the Haday brand can be traced back over 300 years to the Qing Dynasty. Following a series of restructurings in 1994-2007, Haitian transformed from a state-owned to a privately owned company, and was listed in 2014. Haitian has been leading the condiment industry for almost 20 years. Its 17% market share in soy sauce is around 3 times that of its major rival Lee Kum Kee. The firm has a wide-ranging product portfolio covering all commonly used condiments for Chinese cuisine, such as soy sauce, oyster sauce, dipping sauce, and vinegar. Its business relies largely on catering and the food-processing industry, which accounts for 60%-70% of total sales. Bolstered by high product quality, successful operating and marketing strategies, and sound management execution, Haitian has delivered solid net profits at a 21% CAGR for the past five years, along with rapid growth in the catering industry.