Why is foodservice still weighing on sales growth?

  • Following discussions with the company’s investor relations team, Goldman Sachs said Haitian’s condiment sales rose about 4% in the first three quarters of 2026, with the company continuing to gain share amid industry weakness. The company observed that some third-party data showed a single-digit percentage decline year over year in third-quarter sales through consumer-facing channels.
  • Management sees weak foodservice demand as the main drag on revenue in both the first three quarters and the third quarter. The company has substantial exposure to business customers, making a recovery in the foodservice channel especially important to overall growth.
  • The company controlled shipments in the third quarter, with channel inventory remaining at about 2.5 months. Goldman Sachs is watching the buildup of inventory for the Lunar New Year from the fourth quarter of 2026 through the first quarter of 2027. Given the relatively high comparison base in the same period a year earlier, the company also plans to maintain its focus on channel health.

Why is the company holding off on price increases despite rising costs?

  • Management said soybean purchase prices rose by a percentage in the teens year over year in the second quarter of 2026, were broadly flat quarter over quarter in the third quarter, and edged up again after the start of the fourth quarter. Given the low base in the fourth quarter of 2025, the year-over-year cost increase could still widen even though the company locked in some prices early in the fourth quarter.
  • PET costs remain high and volatile, sugar prices are down year over year, and other raw materials are broadly stable. Goldman Sachs is therefore cautious about pressure on fourth-quarter gross margin.
  • The company is currently prioritizing sales volume and market share and has no near-term plans to raise prices; it will decide later in light of changes in demand and costs. Management expects the ratio of selling and administrative expenses to revenue to remain broadly stable, although expense dilution in the fourth quarter will depend on shipment trends.

What other temporary pressures are weighing on profit?

  • Management regards some third-quarter profit headwinds as temporary, including a foreign-exchange loss of 160 million yuan and lower investment income. The foreign-exchange loss was equivalent to about 7% of pretax profit for the quarter; the loss in the first half was 480 million yuan.
  • The company is reducing its exposure to non-renminbi currencies to control the impact of exchange-rate movements on 2027.

Which products and channels could drive long-term growth?

  • Management said both premium and mid- to low-priced products grew, with premium health-oriented products up more than 20% year to date in 2026. A revised national standard for soy sauce production will take effect on 1 December 2026, and the company expects its product quality standards and research and development strengths to help it benefit.
  • For business customers, the company is targeting restaurant chains and food-industry customers to capture opportunities from the standardization of foodservice production. In consumer channels, it is developing exclusive products for membership stores, discount retailers and new retail, helping flavored and specialty condiments remain relatively resilient.
  • Overseas, Amoy already has channel and operating experience in Hong Kong, the United States and Europe. Management believes Haitian can contribute distribution, production and research and development capabilities in mainland China, and that the two may complement each other.