Foshan Haitian Flavouring And Food Company Ltd., dubbed the "soy sauce Maotai," has established elevated expectations for its future growth trajectory.
The company recently revised performance assessment criteria in its A-share employee stock ownership plan, raising profitability targets significantly.
The initial proposal required net profit attributable to shareholders to grow by no less than 10.8% in 2025 compared to 2024. The revised plan now uses 2024 as the baseline year, demanding an annual compound growth rate of at least 11% through 2026.
The employee stock ownership scheme involves up to 800 core management personnel and key employees, with a total scale of 184 million yuan funded by the company's incentive reserves.
This revision extends the assessment period from one year to two years while simultaneously increasing growth rate objectives. Based on the new criteria, Foshan Haitian Flavouring's net profit attributable to shareholders is projected to reach approximately 7.82 billion yuan by 2026.
This modification comes less than half a month after the original plan's announcement, coinciding with the release of Foshan Haitian Flavouring's strong half-year results that bucked industry trends.
In the first half of the year, Foshan Haitian Flavouring achieved revenue of 15.23 billion yuan, up 7.6% year-over-year, and net profit attributable to shareholders of 3.91 billion yuan, rising 13.3% year-over-year, both reaching historical highs for the period.
During the same timeframe, Zhongju High-Tech and Qianhe Condiment experienced double-digit declines in both revenue and net profit.
The performance growth stems primarily from the stability of traditional soy sauce operations and successful diversification initiatives.
Breaking down by category, soy sauce, the company's largest single product, generated revenue of 7.928 billion yuan, increasing 9.14% year-over-year, recovering to pre-"dual standard controversy" levels.
Specialty condiments, including vinegar, cooking wine, and cold dish dressing, saw revenue grow 16.7% year-over-year to 2.51 billion yuan in the first half, contributing more to overall performance than oyster sauce and seasoning sauce categories combined.
Simultaneously, due to declining prices of soybeans, packaging materials, and other raw materials, Foshan Haitian Flavouring's gross margin improved nearly 3 percentage points year-over-year to 40.12%, while net margin rose to 25.75%.
Channel optimization and consolidation at Foshan Haitian Flavouring continues, though the pace moderated quarter-over-quarter in Q2:
In Q1, the company added 437 distributors while reducing 476, resulting in a net decrease of 39 distributors.
In Q2, it added 152 distributors and reduced 139, achieving a net increase of 13, with significantly narrowed fluctuation ranges.
Diminishing demographic dividends, combined with continued pressure on the foodservice industry, continue constraining growth potential in China's condiment market.
Against this backdrop, Foshan Haitian Flavouring has explicitly incorporated overseas expansion into its strategic framework, setting a target for international revenue to comprise 15% of total revenue within three years.
The company plans to allocate at least approximately HK$1.85 billion from its Hong Kong IPO proceeds toward Southeast Asian and European channel development, brand building, certification investments, and long-term capacity planning.
However, Foshan Haitian Flavouring has not yet disclosed specific revenue proportions from overseas operations. Management indicated during the half-year performance briefing that this business remains in its early stages.
To bolster market investment confidence, Foshan Haitian Flavouring plans to implement its first interim dividend distribution since listing: 2.6 yuan in cash dividends per 10 shares, totaling 1.52 billion yuan.
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