700 billion Haitian Flavor Industry, 500 billion ashes

Sharp eyes on finance

2024-05-30 17:09Posted on the official account of Beijing Ruiyan Finance

-2.7%, -2.1%, -2.9%.

In recent days, Haitian Flavor, the supergiant of the food industry, has fallen into a continuous decline.

After three consecutive years of decline, the bubble completely burst

The recent continuous decline has made Haitian Flavor's share price close in the negative again on the annual line this year, falling by about 4%.

From 2021 to 2023, Haitian Flavor will fall by 31%, 16%, and 42% respectively. If it doesn't change, it will be the fourth consecutive year of decline for Haitian Flavor.

The food and beverage industry has been a place of bull stocks in the past, and Haitian Flavor has continued to perform strongly since its listing in 2014. Especially since 2017, relying on its status as the "first brother" in the condiment industry, it has become the object of competition among public funds, and the stock price has begun to accelerate its take-off.

From 2017 to 2020, Haitian Flavor Industry rose by 113%, 33%, 62%, and 130% respectively.

The soaring stock price has made Haitian Flavor Industry ascend to the altar and become what people call "soy sauce grass", with a market value of more than 700 billion yuan, ranking 11th among all A-share listed companies.

At that time, the price-earnings ratio of Haitian Flavor exceeded 100 times, which was comparable to the "market dream rate" level of the GEM during the big bull market in 2015.

Why does a company that makes condiments have such a high valuation? The first is the high performance growth for many years, and the second is that the fund managers have collectively held together and speculated the stock price to an incredible extent.

Of course, more important is the second point.

The reason for the fund's brainless grouping and high-level grouping Haitian Flavor Industry is that the company's performance grows by dozens of percent every year.

However, the condiment industry is too traditional, and unless the population continues to grow explosively, the high annual double-digit growth rate is categorically unsustainable. This is a conclusion that can be drawn based on common sense and logic.

But fund managers don't seem to believe in common sense, except for brainless blowing, they are brainless chasing high.

Revenue fell for the first time, and net profit continued to decline

With the collapse of the fund group and the downward trend of Haitian Flavor's own growth rate, since 2021, its stock price has changed from a long-term rise to a long-term decline, falling for more than 3 consecutive years.

In the past three years, if Haitian Flavor's share price plummeted by 31% in 2021, more due to the overall collapse of the fund's group stocks, then in 2023, against the backdrop of the Shanghai Composite Index's 3.7% decline in the whole year, its stock price will also plummet by 42%, which is entirely due to its own reasons.

In 2023, Haitian Flavor's revenue will be 24.559 billion yuan, a year-on-year decrease of 4.1%; net profit was 5.627 billion yuan, down 9.21% year-on-year.

Since Haitian Flavor was listed in 2014, there has never been a decline in revenue, and 2023 will be the first decline, and its net profit will decline for the second consecutive year.

In 2023, the gross profit margins of Haitian's three major products of soy sauce, seasoning sauce and oyster sauce will be 42.6%, 35.5% and 29% respectively, only the gross profit margin of soy sauce will increase slightly year-on-year, and the gross profit margin of sauce and oyster sauce will all decline.

Haitian's main product is undoubtedly soy sauce, whose sales will decline by more than 8% in 2023, becoming the most serious category, which has directly led to an increase in the company's soy sauce inventory by 152.54%.

Soy sauce is not liquor, it has a shelf life, and the more serious the pressure is, the more it will be reduced in price and promoted. Price reductions will further erode gross and net profits.

Moreover, after Haitian Flavor caused a huge storm of additives during the "Eleventh" period in 2022, the author believes that the company will never dare to reduce quality in exchange for profits, so as not to become the target of public opinion again.

In the first quarter of 2024, Haitian Flavor's revenue will be 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%.

Pang Kang, the boss of Haitian Flavor, said bluntly: "There is a gap between the company's operation and the expected goals in 2023, but this has stimulated the company's stronger sense of crisis and urgency, and accelerated the reform within the company." ”

The effect of the reform said by the boss is reflected in the double-digit growth in the first quarter. However, the company's stock price did not improve after the quarterly report, which may be related to the low base of the company's performance last year.

Growth after a low base will not have much of an uplifting effect on the market. Because the power of public funds, which dominate Haitian's stock price, is getting weaker and weaker.

The fund retreated and was hit hard by the opponent

At present, among the top ten shareholders of Haitian Flavor, there is only one public fund, which is the Industrial and Commercial Bank of China-SSE 50 ETF Fund, which ranks 10th, with a shareholding ratio of 0.5%.

As of the end of the first quarter of this year, there were only 47 funds holding Haitian Flavor, holding 66.81 million shares, accounting for only 1.2% of the total share capital.

At the end of 2023, the proportion was 2.24%.

In other words, in the first quarter of this year, the few remaining fund holdings of Haitian Flavor Industry decreased by nearly half.

Although Haitian Flavor has fallen from a market value of 700 billion yuan to 200 billion yuan now, it is also a large-cap stock anyway, and currently ranks 48th in the total market value of all A-share companies.

Such a volume cannot be pulled up by private equity and large investors. The public funds that dominated the past rally of Haitian Flavor Industry have retreated all the way.

Although Haitian's performance has returned to growth, it has not been much interested in the fund.

In September and October 2022, after the "technology and ruthless" additive incident of Haitian Flavor Industry was exposed, the company's catastrophic crisis public relations level caused the reputation and brand reputation established over the years to decline sharply.

In 2022, Qianhe Flavor's share price will rise 4% and fall 22% in 2023, which is far better than Haitian Flavor's performance of 16% and 42% in the same period.

Haitian Flavor Industry used not to take Qianhe Flavor Industry too seriously, but the reputation of Qianhe soy sauce after the additive incident was once explosive, and it replaced Haitian soy sauce to a large extent.

Nowhere is this more evident than in earnings reports.

In 2023, Qianhe Flavor's revenue will be 3.207 billion yuan, a year-on-year increase of 31.62%; net profit was 530 million yuan, a year-on-year increase of 54.22%.

Coupled with the eyesight of soy sauce brands such as Lee Kum Kee, Chubang, Arowana and Lao Caichen, Haitian Flavor's market share is facing an increasingly strong loss after the catastrophic crisis of public relations.

Haitian Flavor's revenue is far ahead of its peers, most importantly because of its large dealer team, which has expanded the company's territory, but in the past two years, the number of its distributors has continued to decrease.

In 2021, Haitian had 7,430 dealers, which decreased to 6,591 in 2023.

It stands to reason that if there are fewer dealers, there will be less revenue. However, Pang Kang, the boss of Haitian, said that "there is no positive proportional relationship between the number of dealers and revenue, and the reduction of the number of dealers is the company's active optimization on the one hand, and on the other hand, under the stock economy, some small-scale dealers with low efficiency and lack of competitiveness are eliminated by the market." ”

To be honest, if the boss says the word "stock economy", the funds that value incremental market space will have to retreat.

Haitian Flavor Industry has fallen by 500 billion in market value, and it is becoming more and more unattainable to restore its former glory.

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