Haitian Earnings: Channel Reforms Drove Stronger Sales and Profit; Retaining Fair Value Estimate

Wide-moat Haitian’s 2024 revenue and net income exceeded our estimates by 1%, thanks to stronger-than-expected volume growth in soy sauce and dipping sauces. Gross margin also came in 1.2 percentage points stronger than our forecast due to operating leverage and input costs tailwinds. Operating expenses ratios were higher than 2023, aligning with our view that Haitian had to increase investments in channel and product diversification. We raised our 2025 net income projection by 5% to account for operating leverage and favorable input costs, but left our longer-term forecasts largely unchanged. Consequently, we retain Haitian’s fair value estimate at CNY 42 per share, which implies 33 times 2025 price/earnings and 23 times enterprise value/EBITDA. We view shares as fairly valued.