Goldman Sachs: Haitian’s foodservice demand under pressure; soybean and PET costs squeeze fourth-quarter gross margin

Where is Haitian’s growth coming from amid industry weakness?

Goldman Sachs says that, despite the high proportion of Haitian’s business serving corporate customers, condiment sales grew approximately 4% in the first three quarters of 2026, and the company continued to gain market share. The company observed that some third-party data showed a single-digit year-on-year decline in consumer-channel sales in the third quarter.
Weak end demand from foodservice remained the main drag on revenue in both the first three quarters and the third quarter. By controlling third-quarter shipments, the company kept channel inventory at approximately 2.5 months and plans to continue focusing on channel health in 2027.
Goldman Sachs is watching Lunar New Year stocking from the fourth quarter of 2026 through the first quarter of 2027: the fourth quarter faces a high year-on-year comparison base, and stocking performance will influence assessments of near-term growth.

Management said soybean procurement prices rose by a low double-digit percentage year on year in the second quarter of 2026, were broadly flat quarter on quarter in the third quarter, and rose slightly again after the start of the fourth quarter. Given the low base in the fourth quarter of 2025, the year-on-year increase in soybean costs for the quarter could still widen, even though the company locked in some prices early in the fourth quarter.
PET prices remain high and volatile, sugar costs have fallen year on year, and other input costs are broadly stable. Goldman Sachs is therefore cautious about fourth-quarter gross margin pressure from soybeans and PET.
The company is currently prioritizing sales volume and market share and has no near-term plans to raise prices; subsequent decisions will depend on changes in demand and costs. Management expects the full-year selling expense ratio to be approximately 6%–6.5% and the administrative expense ratio excluding R&D to be approximately 2%–2.5%, but the extent to which fourth-quarter revenue absorbs expenses will depend on shipment trends.

Management considers some of the drags on third-quarter net profit temporary, including a foreign exchange loss of RMB 160 million and lower investment income; the foreign exchange loss was equivalent to approximately 7% of the quarter’s pre-tax profit, while the foreign exchange loss in the first half was RMB 480 million.
Exchange rate movements are difficult to predict, and the company is reducing its exposure to non-renminbi currencies to control the impact of foreign exchange in 2027.

For corporate customers, Haitian is targeting restaurant chains and leading food industry customers, with opportunities arising from greater standardization of production by restaurant chains. In consumer channels, the company is developing exclusive products with membership stores, discount retailers and new retail channels; management says this has helped specialty condiments remain relatively resilient recently.
As of the report’s publication, sales of premium health products had grown by more than 20% during the year. The company is also optimistic about the new national standard for soy sauce production, effective 1 December 2026: it requires amino acid nitrogen to be generated naturally through the fermentation of soybeans and wheat. The company believes its quality standards and R&D capabilities position it to capitalize on this change.
Overseas, acquired company Amoy has distribution channels and operating experience in Hong Kong, the United States and Europe; Haitian can provide mainland distribution, production and R&D capabilities. Management believes the integration has laid the foundation for Amoy’s growth.