New stock issuance | "A+H seasoning leader" Foshan Haitian Flavouring and Food has started its public offering, planning to list on June 19 with a subscription amount of HKD 3666.62 per hand.

Futu News reported on June 11, $HAITIAN FLAV (03288.HK)$ announced that it will conduct an initial public offering from June 11 to June 16, intending to globally issue approximately 0.263 billion shares, with an expected listing on June 19.

Company Overview

Foshan Haitian Flavouring and Food was established in 1955 as a joint venture, forming the Haitian Soy Sauce Factory, and is one of the first "Chinese time-honored brands" recognized by the Ministry of Commerce of the People's Republic of China. The products currently produced include over 1000 SKUs such as soy sauce, oyster sauce, condiments, vinegar, with an annual output value exceeding 20 billion yuan.

In 2014, $Foshan Haitian Flavouring and Food (603288.SH)$ Listed on the Shanghai Stock Exchange. According to Kantar's "2024 Global Brand Footprint Report," Foshan Haitian Flavouring and Food ranked 4th among fast-moving consumer goods brands in China. In 2024, the China Brand Power Index 2024 C-BPI list was released, and Foshan Haitian Flavouring and Food won "four championships" in the seasoning industry, achieving first place in the brand rankings for soy sauce, oyster sauce, sauces, and vinegar, with soy sauce maintaining the top spot for 14 consecutive years.

According to a report by Frost & Sullivan, Foshan Haitian Flavouring and Food is a leader in China's condiment industry, ranking first in the Chinese condiment market by revenue in 2024. The market size of China's condiment industry in 2024 reaches RMB 498.1 billion, with Foshan Haitian's market share at 4.8%, more than twice that of its largest competitor. By revenue in 2024, Foshan Haitian ranks fifth globally. The global condiment market reaches RMB 2,143.8 billion in 2024, with Foshan Haitian's market share at 1.1%. By sales volume, Foshan Haitian has continuously been China's largest condiment enterprise for 28 years. The sales volume of Foshan Haitian's soy sauce and oyster sauce products has long ranked first in China's condiment market, while the sales of condiment sauces, vinegar, and cooking wine are also among the top in the Chinese market.

Financial Overview

According to the 2024 annual report disclosed by Foshan Haitian Flavouring and Food, the company's revenue for 2024 is 26.901 billion yuan, an increase of 9.53% year-on-year; net income attributable to shareholders of the listed company is 6.344 billion yuan, an increase of 12.75% year-on-year; net assets attributable to shareholders of the listed company are 30.895 billion yuan, an increase of 8.29% year-on-year; overall net margin is 23.63%, an increase of 0.65% year-on-year.

In 2024, the revenues from the company's soy sauce, condiment sauces, oyster sauce, and other categories are 13.758 billion yuan, 2.669 billion yuan, 4.615 billion yuan, and 4.086 billion yuan, respectively, with year-on-year growth rates of 8.87%, 9.97%, 8.56%, and 16.75%.

Industry Overview

The global seasoning market is enormous. According to Frost & Sullivan, the global seasoning market is projected to reach RMB 2,143.8 billion by 2024, with a compound annual growth rate of 3.2% from 2019 to 2024. Following recovery post-pandemic, steady growth in consumer demand, and an increasingly diverse range of seasoning products, it is expected that the global seasoning market will grow to RMB 2,891.7 billion by 2029, with a compound annual growth rate of 6.2% from 2024 to 2029.

The United States, Europe, and China are the three largest countries/regions in the global seasoning market, with market sizes reaching RMB 534.1 billion, RMB 519.4 billion, and RMB 498.1 billion respectively in 2024. Between 2024 and 2029, the Southeast Asian and Latin American markets are expected to grow the fastest among the major global markets, with compound annual growth rates of 9.1% and 7.8% respectively.

Cornerstone Investor

Cornerstone investors have agreed to subscribe or enable their designated entities to subscribe for the relevant number of offered shares at the offering price, totaling approximately USD 0.595 billion. The cornerstone investors include: HHLRA, GIC, RBC, Yuanfeng Fund, UBS AM, Boyu, HSG Growth, and Foshan Development.

Based on an offering price of HKD 35.65 per H share (the median of the indicative offering price range), the total number of shares to be subscribed by the cornerstone investors will be 0.131 billion shares.

Source: Prospectus.

Purpose of fundraising

In terms of fundraising purposes, Foshan Haitian Flavouring and Food expects the net proceeds from the global offering to be approximately 9.271 billion HKD (calculated based on the median price of 35.65 HKD in the offering range). According to the prospectus, Foshan Haitian plans to use the funds raised from the global offering for the following purposes:

Approximately 20.0% will be used for product development as well as research and development of cutting-edge technology and process upgrades; approximately 30.0% will be used for capacity expansion, adoption of new technologies, and digital upgrades of the supply chain; approximately 20.0% will be used to enhance the group's global influence by building a global brand image, expanding sales channels, and improving overseas supply chain capabilities; approximately 20.0% will be used to strengthen the group's sales network and enhance its penetration capabilities; and approximately 10.0% will be used as working capital and for general corporate purposes.

More reading:Foshan Haitian Flavouring and Food prospectus.

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