Haitian Flavouring: Channel Reforms to Support Earnings Growth Over the Medium Term

We keep wide-moat Foshan Haitian Flavouring’s earnings forecasts unchanged ahead of the release of its 2024 results in late March. We think the company could achieve the 2024 net profit growth target of 11%, thanks to channel reforms and raw material cost tailwinds. We also maintain our fair value estimate of CNY 42 per share, which implies 34 times 2025 price/earnings, 24 times enterprise value/EBITDA, and a 2% dividend yield. The company is planning a second listing in Hong Kong. Details remain scant about the size of the H-share listing, but the company is targeting domestic and overseas expansion with the proceeds. Overseas revenue currently accounts for a high-single-digit mix for the company. We believe it is sensible for Haitian, as a domestic condiment leader, to eye growth opportunities in overseas markets as a long-term growth strategy.