World Largest Soy Sauce Manufacturer ‘Haitian’ Raises HK$10 Billion in Hong Kong IPO

World Largest Soy Sauce Manufacturer 'Haitian' Hong Kong IPO

As a company that has landed on the A-share market (Shanghai: 603288) in 2014, this listing marks that Haitian Flavor & Condiments has officially become a food additives company listed on the “A+H” dual platform. The final offering price of Haitian H shares was HK$36.30 per share. On the first day of listing, it opened 3.31% higher at HK$37.50 per share and closed at HK$36.50 per share. It has selected CICC, Goldman Sachs and Morgan Stanley as joint sponsors.

During its global public offering, Haitian introduced eight cornerstone investors, including top-tier institutions such as HHLR Advisors, Ltd., GIC Private Limited, and UBS Asset Management, collectively subscribing to nearly HKD 4.7 billion, accounting for almost half of the issued shares.

Pre-IPO Financial Performance of Haitian

In the three years preceding the listing (2022-2024), Haitian experienced short-term performance fluctuations due to strategic adjustments, failing to maintain the same level of operational performance and financial results. In 2022, Haitian achieved total revenue of RMB 25.61 billion. In 2023, due to channel optimization, product upgrades, and internal management restructuring, revenue fell by 4.1% to RMB 24.56 billion, with the gross margin also decreasing from 34.9% to 33.9%. However, as the strategic adjustments gradually took effect, 2024 saw a significant recovery, with net profit increasing by 12.6% from RMB 5.64 billion in 2023 to RMB 6.36 billion in 2024, demonstrating strong operational resilience.

From 2022 to 2024, Haitian’s current asset net value and total asset net value both showed stable growth. Specifically, the net value of current assets increased from RMB 20.254 billion at the end of 2022 to RMB 23.856 billion by the end of 2024, a cumulative growth of 17.8%. The increase in 2023 was mainly due to a rise in cash and cash equivalents, while the growth in 2024 was largely driven by increases in the fair value of other financial assets, time deposits, certificates of deposit, and a reduction in contract liabilities, despite a decrease in cash and cash equivalents. Meanwhile, the net value of assets also increased from RMB 268.845 billion at the end of 2022 by 8.0% to RMB 290.330 billion at the end of 2023, primarily due to an increase in annual profits, partially offset by dividend distributions. By the end of 2024, the net value of assets continued to grow to RMB 314.019 billion, an increase of 8.2% from the end of 2023.

Equity Structure of Haitian Before and After IPO

As of the last practicable date, approximately 58.38% of Haitian’s issued share capital was directly and indirectly held by Guangdong Haitian through Foshan Haipeng. Guangdong Haitian is owned by a group of concerted actors, holding about 73.59% of the equity. The group of concerted actors also directly owns about 13.75% of the total issued share capital of Foshan Haitian. Together with the equity held by Guangdong Haitian, the group of concerted actors collectively owns approximately 72.12% of the issued share capital. After the issuance of H shares, Guangdong Haitian and the group of concerted actors will, directly and indirectly and in accordance with the concert party agreement, hold about 68.86% of the issued share capital. Therefore, after listing, Guangdong Haitian, Foshan Haipeng, and the group of concerted actors are considered a group of controlling shareholders.

Allocation of IPO Funds Raised by Haitian

For its Hong Kong stock listing, fundraising will primarily be used to address five major pain points: 20% will be invested in the research and development of cutting-edge technologies and process upgrades; 30.0% will be allocated for capacity expansion, adoption of new technologies, and digital upgrading of the supply chain; 20.0% will be dedicated to enhancing global influence through establishing a global brand image, expanding sales channels, and enhancing overseas supply chain capabilities; 20.0% will be used to strengthen the sales network and enhance its penetration capabilities; and 10.0% will serve as working capital and for general corporate purposes.

Existing Market Landscape, Advantages and Challenges of Haitian

As of the reporting period, Haitian has over 6,700 distributors and more than 1,450 product SKUs, including soy sauce, oyster sauce, and other specialty condiments. It occupies a leading position in the Chinese condiment market, with the industry’s overall size reaching RMB 498.1 billion in 2024, and Haitian holding a market share of 4.8%, penetrating over 80% of Chinese households. As a leading company in condiment industry around the world, Haitian leverages its market leadership, well-known brand, comprehensive product line, extensive distribution network, strategically located production facilities, robust R&D capabilities, strict quality control, economies of scale, and stable raw material supply to maintain a significant position within the industry.

Haitian committed to long-term value creation, deeply cultivates the condiment sector, continuously expands its product categories, and strives for leadership in niche markets while actively expanding into international markets to strengthen its brand influence. In supply chain management, Haitian achieves industry-leading quality and cost advantages by optimizing processes and enhancing efficiency, making it the listed condiment company with the highest per capita output in China. Haitian has also developed an extensive and deep distribution network, covering nearly 100% of prefecture-level cities and close to 90% of county-level markets. Its sales team works closely with distributors, penetrating diverse channels such as dining, supermarkets, wholesale, and e-commerce, providing high-quality and convenient services to various customers. Haitian continues to invest in technological R&D, particularly achieving significant achievements in fermentation and brewing technologies. By the end of 2024, it had accumulated over 1,000 patents, creating substantial technological barriers. With these advantages, Haitian continually consolidates its industry position and will keep deepening its layout in the Chinese market, accelerate its refined development, promote brand globalization, and steadily increase its market share.

However, Haitian also faces numerous challenges, including fierce market competition, rapid changes in consumer demands, fluctuations in raw material prices, food safety risks, pressures in brand management and maintenance, difficulties in channel management and expansion, barriers to international market expansion, uncertainty in the macroeconomic environment, environmental protection pressures, and the uncertainty of new product development and market acceptance. These factors could adversely affect the company’s market position, product sales, brand image, and profitability, necessitating continual response and overcoming by the company.

Short-Term and Long-Term Strategies for Haitian IPO

In the future, short-term goal of Haitian is to drive steady revenue growth through channel optimization and product innovation, while its long-term focuses on premiumization and internationalization. With the rising trend of healthy eating, the development of new categories such as zero-additive soy sauce and composite condiments will become growth points. Additionally, with the help of this Hong Kong IPO, the company is expected to accelerate its expansion into overseas markets, gradually increasing the proportion of international business, thus progressing from a leader in China’s condiment market to a global food giant.