The "surging" of white horse stocks has created various "industry leaders".

At the beginning of 2019, the stock price of Haitian Flavouring and Food Company was only around 30 yuan; by the beginning of 2021, its stock price had risen to a peak of 126.2 yuan, a fourfold increase. In terms of market capitalization, Haitian Flavouring and Food Company also climbed from an initial 160 billion yuan to 701.6 billion yuan, even surpassing Sinopec at its peak.

However, with the bursting of the white horse stock bubble in recent years, the stock price of Haitian Flavouring and Food Company has also turned downward. Statistics show that in 2021, 2022, and 2023, the stock price of Haitian Flavouring and Food Company fell by 31.83%, 16.21%, and 42.28%, respectively.

As of the close on April 29, 2024, the stock price of Haitian Flavouring and Food Company was reported at 39.57 yuan per share, a drop of about 70% from its peak, with its market capitalization shrinking by approximately 480 billion yuan. At present, after a prolonged correction, the "soy sauce leader"光环 of Haitian Flavouring and Food Company has long faded. But the question worth pondering is—how long will this downward trend continue?

The Pressure Behind the "Soy Sauce Leader"

It cannot be denied that the stock performance of Haitian Flavouring and Food Company is closely related to the secondary market.

However, the trigger for the continuous decline in Haitian Flavouring and Food Company's stock price in recent years is actually the changes in its fundamentals.

From the data, the stock price of Haitian Flavouring and Food Company is highly correlated with its performance. For example, in its best-performing year, 2020, the stock price of Haitian Flavouring and Food Company rose by 130.55% for the year, while its performance also achieved double-digit growth, with annual revenue and net profit reaching 22.79 billion yuan and 6.403 billion yuan, respectively, and revenue and net profit growth rates of 15.13% and 19.61%.

If we look at a longer period, the performance of Haitian Flavouring and Food Company becomes even more exaggerated. According to media statistics, from 2011 to 2020, the revenue of Haitian Flavouring and Food Company grew from 6.091 billion yuan to 22.792 billion yuan, with a compound annual growth rate of 14%; net profit attributable to the parent company grew from 956 million yuan to 6.403 billion yuan, with a compound annual growth rate of 21%.

However, after entering 2021, the performance growth of Haitian Flavouring and Food Company began to slow down. In 2021, Haitian Flavouring and Food Company achieved revenue and net profit of 25 billion yuan and 6.671 billion yuan, respectively, with growth rates of 9.71% and 4.18%; performance growth fell to single digits. By 2022 and 2023, Haitian Flavouring and Food Company even experienced negative growth for two consecutive years, with revenue growth rates of 2.42% and -4.1%, and net profit growth rates of -7.09% and -9.21%, respectively. Such performance is nothing short of a "Waterloo" compared to the past decade.

So, why has the performance of Haitian Flavouring and Food Company diverged so significantly since 2021?

Behind this lies significant changes in the external environment.

First, there is the continuous rise in raw material prices. Classified by industry, Haitian Flavouring and Food Company's main business is food manufacturing. In 2023, its revenue was 228.2 billion yuan, with operating costs as high as 145.7 billion yuan, accounting for 90.88% of revenue. Specifically, Haitian Flavouring and Food Company's revenue mainly comes from two products—soy sauce and oyster sauce, with soy sauce accounting for the highest proportion of revenue at 51.46% in 2023. The main raw material for soy sauce is soybeans, and over the past few years, soybean prices have surged due to various factors, which has "eroded" the net profit of Haitian Flavouring and Food Company.

In 2020, the gross profit margin of Haitian Flavouring and Food Company's soy sauce products was as high as 47.38%. However, with the rise in soybean prices, the gross profit margin of soy sauce products began to decline gradually, reaching 42.91%, 40.29%, and 42.63% in 2021, 2022, and 2023, respectively. Although Haitian Flavouring and Food Company raised prices for its products in 2021, it clearly did not have the desired effect.

Second, there is the 萧条 of the 餐饮 market. Over the past few years, affected by the broader environment, consumption has been sluggish, and offline 餐饮 consumption has also suffered a significant impact.

According to media statistics, China's 餐饮 revenue in 2021 was 4.6895 trillion yuan, a year-on-year increase of 18.6%. Although growth was achieved, it was almost zero compared to 2019.餐饮 channels account for 56% of China's 调味品 market sales, and the 疲软 in 餐饮 consumption has led to 疲软 demand for soy sauce. Haitian Flavouring and Food Company's 餐饮 channel 占比 is as high as 60%, so the impact is undoubtedly greater.

At present, although the stock price of Haitian Flavouring and Food Company has experienced a continuous correction over the past three years, many investors believe this is only due to the impact of the secondary market. However, the changes in its fundamentals are actually the most important reason. Faced with the dual pressures of soaring raw material prices and a 低迷餐饮 market, how can Haitian Flavouring and Food Company break through the 困境？

More Than Just "Soy Sauce"

On April 26, Haitian Flavouring and Food Company disclosed its annual report as well as its first-quarter report.

According to the financial report, in the first quarter of this year, Haitian Flavouring and Food Company achieved revenue of 7.694 billion yuan, a year-on-year increase of 10.21%; net profit was 1.919 billion yuan, a year-on-year increase of 11.85%, achieving "double growth" in performance.

In terms of growth rate alone, this is one of the better-performing quarters for Haitian Flavouring and Food Company in the past dozen or so quarters. However, the reason for the return to double-digit growth in the first quarter is actually related to the low base of performance in the first quarter of 2022. Over a longer period, the current revenue and net profit of Haitian Flavouring and Food Company have only returned to the level of 2022.

For Haitian Flavouring and Food Company, the most important way to break the growth 困境 is to find more growth points, which is the often-discussed "diversification transformation".

In fact, in recent years, Haitian Flavouring and Food Company has been actively promoting diversification. For example, in the edible oil business, according to media reports, as early as January 2020, Haitian Flavouring and Food Company acquired a 67% stake in Hefei Yan 庄 Edible Oil Co., Ltd. for 169.175 million yuan. The "Yan 庄" sesame oil sold in the market is a product of Haitian Flavouring and Food Company. In January 2021, Haitian Flavouring and Food Company launched a high-end edible oil called "Oil Commander". Currently, the "Oil Commander" brand has nearly 30 SKUs, including corn germ oil, first-grade soybean oil, and physically pressed peanut oil.

In the 复合调味品 sector, Haitian Flavouring and Food Company has also been "paying attention". In 2017, Foshan Haitian Flavouring and Food Co., Ltd., a subsidiary of Haitian Flavouring and Food Company, acquired a 70% stake in Zhenjiang Dan 和 Vinegar Industry Co., Ltd. for 40.271 million yuan and later established a subsidiary to expand the vinegar sector. Later, as hot pot became popular, Haitian also launched hot pot 底料。

However, despite its efforts to promote diversification, compared to soy sauce and oyster sauce, which are already "established" products, Haitian Flavouring and Food Company has yet to find a new growth point.

In the 2023 financial report, the "other" category, representing diversified businesses, achieved revenue of 3.499 billion yuan, accounting for 14.25% of total revenue. Although this represents some growth compared to the 2.932 billion yuan revenue in 2022, with such revenue and 占比， it is clearly not enough to pull Haitian Flavouring and Food Company out of the mire of slowing growth.

Perhaps due to concerns about the 前景 of Haitian Flavouring and Food Company, many institutions have chosen to exit. Just looking at northbound capital, as of the close on April 26, the 持仓市值 of northbound capital was 8.548 billion yuan; on April 28, 2023, the 持仓市值 of northbound capital was as high as 23.32 billion yuan—a huge difference.

Clearly, although performance improved in the first quarter of this year, it has not been recognized by capital. Haitian Flavouring and Food Company still has a long way to go to achieve a 真正的复苏。