HAI TIAN(SH:603288) Xin Lang Zheng Quan·2025-05-27 10:20Core Viewpoint - Haitian Flavor Industry is pursuing a secondary listing on the Hong Kong Stock Exchange to address growth bottlenecks in the domestic market and to tackle challenges related to brand trust and international competition [1][2]. Group 1: Reasons for Secondary Listing - The secondary listing is driven by dual motivations: "valuation repair" and "strategic restructuring" [2]. - In 2024, Haitian's revenue reached 26.901 billion yuan, a year-on-year increase of 9.53%, while the domestic seasoning industry growth rate slowed to 1.3% [2]. - Following the "double standard incident" in 2021, Haitian's market value dropped over 60% from its peak of 700 billion yuan, although its stock price rebounded by 23% in 2024 [2]. - The price-to-earnings ratio (PE) has decreased from a historical high of 65 times to 37 times [2]. - The Hong Kong market values consumer leaders based on long-term cash flow, and Haitian aims to present itself as a "global food group" to enhance its valuation [2]. - Despite being present in over 100 countries, overseas revenue accounted for only 4.01% in 2024, significantly lower than competitors like Lee Kum Kee, which has over 50% [2]. - The new chairman has set a goal to double overseas revenue in three years, with plans to establish factories and acquire local brands in Vietnam and Indonesia [2]. - The company aims to raise 1 billion USD (approximately 7 billion yuan) to support supply chain development in Southeast Asia, international certifications, and brand promotion [2]. Group 2: Challenges Ahead - Haitian must overcome three significant challenges in its Hong Kong journey [4]. - The first challenge is rebuilding brand trust, as concerns about the safety of Chinese food products persist, highlighted by past incidents like the removal of Haitian products from Singapore supermarkets [4]. - The second challenge involves localizing products for overseas markets, as the strong regional characteristics of seasonings pose difficulties; for instance, Japanese soy sauce has a penetration rate of less than 3% in Europe and the U.S. [4]. - The company faces consumer resistance to its high-salt soy sauce, which contains 15%-18% salt, exceeding the average acceptance level of 10% in Western markets [4]. - The third challenge is compliance with stricter regulations, such as the EU's revised arsenic content standard for soy sauce, which is 2.3 times stricter than China's [4]. - Haitian will need to invest 200 million yuan to upgrade its filtration processes, leading to an estimated 5% increase in production costs [4]. Conclusion - The secondary listing is not an endpoint but a starting point for Haitian's global expansion [5]. - The short-term valuation recovery will depend on its ESG performance and overseas revenue growth, which is expected to reach 1.5 billion yuan [5]. - The long-term success hinges on whether Haitian can become a "flavor translator" for global consumers as it expands beyond the Chinese market [5].