Nissin Foods' sales in mainland China continue to recover, but the growth rate has begun to slow down, and its instant noodle business is still waiting for a correct answer.
<h4>Key Points:</h4>
<ul>
<li>Net profit for the first three quarters increased by 2.73% year-on-year to HKD 258 million</li>
<li>Revenue from mainland China reached HKD 1.86 billion, a year-on-year increase of 5.4%, with growth slower than the first half of the year</li>
</ul>
Li Shida
In the persistently sluggish Chinese consumer market of 2025, the &#34;old flavor&#34; of instant noodles seems to be more appealing again. On November 10, the Japanese instant noodle giant Nissin Foods Co., Ltd. (1475.HK) announced a gratifying performance report, as this brand that has been in China for 40 years seems to have withstood the test once again.
According to the latest financial report, Nissin's revenue for the first three quarters ending September this year reached HKD 3.06 billion, a year-on-year increase of 6.99%; net profit recorded HKD 258 million, an increase of 2.73%. The gross profit margin also rose from 34.8% in the same period last year to 35.4%, mainly due to increased sales of cup noodles and improved production efficiency.
Regionally, the performance in Hong Kong and other regions was impressive, with revenue increasing by 9.5% year-on-year to HKD 1.201 billion. The company stated that instant noodle sales in Hong Kong were stable, and demand in other overseas markets was rising. In contrast, revenue from mainland China was HKD 1.86 billion, a year-on-year increase of 5.4%, accounting for about 60% of the group's total revenue. However, this growth rate is significantly lower than the 9.4% in the first half of the year, indicating that the momentum in the third quarter has somewhat waned.
<h4>Strengthening Offline Channels</h4>
The company pointed out in an investor meeting that the previously pressured South China market has regained growth, and sales in North and West China have also improved. This shows that the company is moving away from its reliance on e-commerce channels and is re-strengthening its offline distribution and convenience store network, especially in South and West China, to stabilize profit margins and consolidate brand presence.
In terms of innovation, the company has recently launched new products focusing on health concepts, such as non-fried noodles and high-fiber, low-calorie noodles, and has collaborated with anime and game IPs to enhance brand youthfulness. Although these strategies have revitalized the brand, some non-core businesses, such as frozen foods and snacks, continue to incur losses.
The demand for instant noodles in China is indeed recovering. According to statistics from the World Instant Noodles Association (WINA), China's annual consumption of instant noodles has decreased from 46.36 billion servings in 2020 to 42.2 billion servings in 2023, and is expected to rebound to 43.8 billion servings by 2024. This indicates that despite the rise of takeout, self-heating hot pots, and prepared dishes diverting a large amount of instant food demand, instant noodles will not be eliminated in the era of consumption upgrading.
Nevertheless, Nissin's recovery in the Chinese market still appears fragile.
<h4>Stable Quality or Lack of Innovation?</h4>
For Nissin, stable quality is an advantage, but it may also become a constraint. As young consumers in the Chinese market increasingly pursue &#34;freshness&#34; and &#34;interactivity,&#34; traditional flavors and packaging of Demae Iccho and Cup Noodles, while nostalgic, inevitably seem conservative. This contradiction is becoming the biggest challenge for Nissin in both markets
Nissin's brand positioning and consumption scenarios in Hong Kong and the mainland show significant differences. In Hong Kong, &#34;Demae Iccho&#34; is a classic brand that many have grown up with, a staple in almost every household's cupboard. It not only dominates the high-end instant noodle market year-round but also forms a stable supply network with local convenience stores, tea restaurants, and supermarkets, having become a &#34;familiar quality&#34; and &#34;habitual taste.&#34;
In contrast, the mainland market views instant noodles more as an &#34;instant solution&#34; for a fast-paced lifestyle, with the mainstream market still leaning towards price and cost-effectiveness. Domestic brands such as Kang Shifu (0322.HK), Tongyi (0220.HK), Jinmailang, and Baixiang have a large lineup, with product lines ranging from budget to high-end, providing consumers under economic pressure with more cost-effective and fresh options.
Although Nissin has launched several sub-brands, visibility still lags behind. When consumers think of Nissin, they still only associate it with the eternally unchanged packaging of &#34;Hao Wei Dao&#34; and &#34;Demae Iccho.&#34;
According to media statistics, the combined market share of the four major brands, Kang Shifu, Tongyi, Baixiang, and Jinmailang, in the mainland instant noodle market has reached 81.35%. Behind Nissin, South Korean brands Samyang (145990.KS) and Nongshim (004370.KS) are also eyeing the market.
Despite this, Nissin has not scaled back its investments in China. In September of this year, the company spent approximately 240 million yuan to purchase land in Zhuhai, Guangdong, to build a new factory, planning to introduce highly automated production lines to enhance capacity and efficiency. Chairman Ando Kiyotaka stated that this move is to respond to the &#34;increased demand for high-end products and changes in regional markets,&#34; emphasizing that the Chinese market remains a focus for the company's medium to long-term development.
Since the beginning of this year, Nissin's stock price has risen approximately 17.18%. Although it has increased from last year's low, it is still far below the rise of the Hang Seng Index during the same period. Currently, Nissin's price-to-earnings ratio is 37.9 times, higher than Kang Shifu's 15 times and Tongyi's 15.7 times in China, reflecting the market's high expectations for Nissin's brand stability and gross margin improvement, but also indicating that its price is significantly high, and its growth and profitability may not support such a high valuation

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NISSIN FOODS' sales in mainland China continue to recover, but the growth rate has slowed. In the first three quarters, net profit increased by 2.73% to HKD 258 million, with revenue reaching HKD 3.06 billion, a year-on-year increase of 6.99%. Revenue from mainland China was HKD 1.86 billion, a year-on-year increase of 5.4%, with growth slower than in the first half of the year. The company has strengthened offline channels and launched new health concept products, but some non-core businesses are still operating at a loss

Nissin instant noodle sales continue to recover, but it's not time to celebrate yet