New officials take office with three fires.

Investor Network Jordan

In 2024, the Hong Kong stock market welcomes a strong tailwind. According to the latest Statistics from Deloitte China, the total funds raised by new stocks in the Hong Kong stock market will reach approximately 87.6 billion HKD, an increase of 89% year-on-year; in 2025, the Hong Kong stock market will see about 80 new stocks listed, with total funds raised expected to reach 130 billion to 150 billion HKD.

Under this trend, the enthusiasm of A-share companies for listing in Hong Kong is also rising. Numerous mainland enterprises are actively seeking opportunities to list in Hong Kong, aiming to further broaden financing channels, optimize capital structure, and enrich Shareholder backgrounds. On December 12, Foshan Haitian Flavouring and Food (603288.SH) announced that it plans to issue H Shares and list on the Hong Kong Stock Exchange, which is also seen as the first test for the new Chairman.

Plans to list in Hong Kong.

According to the announcement, the Board of Directors and the Supervisory Board of Foshan Haitian Flavouring and Food jointly reviewed and approved a proposal at the meeting on December 11, 2024, that the company plans to issue H shares and apply for listing on the Main Board of the Hong Kong Stock Exchange. Currently, Foshan Haitian Flavouring and Food is intensively collaborating with a series of Institutions for detailed discussions on listing preparation work, but specific details such as financing scale and scheduling are yet to be finalized.

According to Wind data, Foshan Haitian Flavouring and Food has hired China International Capital Corporation, Goldman Sachs, and Morgan Stanley to handle its secondary listing in Hong Kong. According to insiders, Foshan Haitian Flavouring and Food plans to raise at least 1.5 billion USD (approximately 11.7 billion HKD).

The market generally believes that Foshan Haitian Flavouring and Food's listing in Hong Kong will not only provide strong financial support for the company's product localization and market expansion but also help enhance the company's international brand image and comprehensive competitiveness. At the same time, the listing will open up broader financing channels for the company, further enhancing its valuation potential.

As a long-established condiment company in China, although Foshan Haitian Flavouring and Food holds a dominant position in the domestic condiment market, the company still faces numerous challenges on the international stage, especially in the export sector.

According to Wind, currently, Foshan Haitian Flavouring and Food's export volume accounts for only 1% of the company's total sales, which is far below the industry average. This is mainly attributed to the company's past lack of emphasis on expanding into overseas markets, as well as the differences in food standards and dietary habits between different countries and regions. Furthermore, competition in the international condiment market is fierce, with internationally renowned brands like Kikkoman soy sauce already holding significant market share, further exacerbating the difficulties for Foshan Haitian Flavouring and Food to expand in overseas markets.

However, from the perspective of global market trends, the demand for condiments such as soy sauce is continuously rising, and it is expected to develop steadily at a compound annual growth rate of 7.9% in the future. Particularly in the European market, as consumer interest in Asian culinary culture grows, the demand for soy sauce and other condiments is also on the rise, bringing new market opportunities for condiment companies such as Foshan Haitian Flavouring and Food.

Challenges and opportunities coexist.

This IPO in Hong Kong is also viewed by the market as the first major test after the new Director assumed office. In September 2024, Cheng Xue took over from Pang Kang as the new Director of Foshan Haitian Flavouring and Food. Prior to this, Cheng Xue served as the company's Vice Chairman and Executive President for a long time.

In the year since Cheng Xue took over, the company's performance has also shown positive changes. Looking back over the past few years, due to multiple factors such as economic fluctuations and high costs, Foshan Haitian Flavouring and Food's performance had once fallen into difficulties.

In 2022 and 2023, the company’s revenue was 25.61 billion yuan and 24.56 billion yuan respectively, with year-on-year changes of 2.42% and -4.1%; net income was 6.198 billion yuan and 5.627 billion yuan respectively, with year-on-year declines of 7.09% and 9.21%. The consecutive two years of negative growth in net income posed a huge challenge for Foshan Haitian Flavouring and Food.

Entering 2024, Foshan Haitian Flavouring and Food's performance has returned to positive growth. In the first three quarters of this year, the company's revenue reached 20.4 billion yuan, a year-on-year increase of 9.38%; net income reached 4.815 billion yuan, a year-on-year increase of 11.23%.

Regarding the growth in performance, Foshan Haitian Flavouring and Food provided an explanation in the investor relations activity record. The company indicated that in the face of a complex and changing external environment, it actively responded by improving product quality and enriching product specifications to enhance the competitiveness of existing products; at the same time, it developed and launched new products based on consumer demand, continuously enriching the product line to meet the needs of different consumers.

On the channel side, the company is promoting construction and transformation, innovating business models, and further strengthening market competitiveness both in products and channels. In addition, the company continues to tap into operational potential and create profit margins through lean management, improving labor efficiency, technological improvements, and green low-carbon measures, providing strong support for the company's steady growth.

However, while Foshan Haitian Flavouring and Food has achieved results, it also faces some significant challenges.

In recent years, the company has repeatedly fallen into public opinion whirlpools related to food safety, such as the "double standards" incident and the "additive controversy," which have severely impacted the company's brand image and consumer trust. How to rebuild consumer trust, further strengthen food safety management, and ensure product quality and safety are pressing issues that the company needs to tackle.

In terms of channels, Foshan Haitian Flavouring and Food currently relies heavily on traditional channels for its sales revenue. The 2024 semi-annual report shows that the company's online channel sales accounted for only 4%. With the booming development of the e-commerce industry and the changing shopping habits of consumers, the importance of online channels has become increasingly prominent. How to expand online channels and increase the proportion of online sales to adapt to market changes is another major challenge the company faces.

In addition, this November, the company's supervisor He Tao was given a regulatory warning by the Shanghai Stock Exchange for short-term trading, which has raised alarms for the company regarding its internal management and supervision work.

Regarding Market Cap, Foshan Haitian Flavouring and Food has experienced significant fluctuations in recent years. Wind shows that the company's Market Cap dropped from a high of 442.8 billion yuan in 2021 to 368.9 billion yuan in 2022, and then further declined to 211 billion yuan in 2023. Entering 2024, the Market Cap of Foshan Haitian Flavouring and Food has rebounded somewhat. As of December 26, 2024, the Market Cap stands at 258.3 billion yuan. However, returning to previous highs still presents a long and arduous challenge. Market Cap, performance, and consumer trust have become three major mountains that the new Chairman Cheng Xue needs to overcome. (Produced by Thinking Finance)■