HAI TIAN H shares issuance is booming, expected to raise 9.2 billion; Cheng Xue successfully breaks through with a first-quarter profit of 2.2 billion, continuing growth

This article is sourced from: Yangtze Business Daily

After the "working queen" Cheng Xue took office, soy sauce leader HAITIAN FLAV (40.350, -0.08, -0.20%) (603288.SH) successfully broke through.

On June 16, the H-share offering of HAITIAN FLAV ended. Data shows that the financing subscription multiple reached 698.57 times, with oversubscription exceeding 930 times, and the financing subscription amount was around HKD 400 billion.

On the evening of June 17, HAITIAN FLAV announced that this H-share issuance was priced at the upper limit of the offering price range at HKD 36.3 per share, with expected financing reaching HKD 10.1 billion (approximately RMB 9.2 billion).

HAITIAN FLAV was once embroiled in a "double standard" controversy, and its operating performance was under pressure, with net profit attributable to the parent company shareholders (referred to as "net profit attributable to the parent") declining for two consecutive years in 2022 and 2023.

In September 2024, Pang Kang stepped back, and Cheng Xue, who joined HAITIAN FLAV in 1992, took office as the new chairman.

In 2024 and the first quarter of this year, HAITIAN FLAV's revenue and net profit returned to a growth trajectory, with a double-digit year-on-year growth rate in net profit attributable to the parent.

After the H-share listing, what kind of development achievements HAITIAN FLAV will achieve is highly anticipated by the market.

HKD 400 billion funds rush to subscribe for H-shares

In the Hong Kong stock market, the enthusiasm for new shares is high. The issuance of H-shares by HAITIAN FLAV has once again brought back the excitement seen during the listing of CATL (246.250, -0.01, -0.00%).

The progress of HAITIAN FLAV's H-share listing is smooth and relatively fast. In December 2024, HAITIAN FLAV announced its plan to issue H-shares and apply for listing on the main board of the Hong Kong Stock Exchange, aiming to deepen its globalization strategy and enhance its international brand image and comprehensive competitiveness. On January 13 of this year, the company officially disclosed its IPO prospectus on the Hong Kong Stock Exchange, taking a key step towards listing in Hong Kong. After that, the company successfully passed a series of key milestones. On June 11, HAITIAN FLAV published and distributed the H-share prospectus on the Hong Kong Stock Exchange website, officially launching the Hong Kong listing subscription process.

The listing detail announcement released by HAITIAN FLAV shows that the company plans to globally issue approximately 263 million H-shares (the specific number depends on the exercise of the over-allotment option and whether the overallotment right is exercised), of which 15.7943 million shares are for sale in Hong Kong, and approximately 247 million shares are for international sale. The subscription period is from June 11 to June 16, with the expected pricing date on June 17; the offering price is HKD 35 to 36.3 per share, with CICC (34.490, -0.36, -1.03%), Goldman Sachs, and Morgan Stanley serving as joint sponsors, and the shares are expected to start trading on the exchange on June 19 On the evening of June 17, HAITIAN FLAV announced that the final price for this H-share issuance is HKD 36.30 per share (excluding a 1% brokerage commission, 0.0027% Hong Kong Securities and Futures Commission transaction levy, 0.00565% Hong Kong Stock Exchange transaction fee, and 0.00015% Hong Kong Accounting and Financial Reporting Council transaction levy). The overall coordinator's right to adjust the sale volume has been fully exercised, and accordingly, the company will issue and allocate an additional 15.7942 million H-shares at the issuance price, accounting for approximately 6% of the total number of H-shares initially proposed for sale in this global offering.

Based on this calculation, HAITIAN FLAV will issue 279 million H-shares for its Hong Kong listing, raising approximately HKD 10.1 billion.

This H-share issuance by HAITIAN FLAV has garnered global capital enthusiasm. Eight cornerstone investors, including Hillhouse Capital, Government of Singapore Investment Corporation (GIC), UBS Asset Management, Royal Bank of Canada, CITIC Industrial Fund, Sequoia, and Foshan Development, collectively subscribed for approximately 129 million shares, totaling about USD 595 million (approximately HKD 4.7 billion).

It is worth mentioning that the subscription for HAITIAN FLAV's H-share issuance was extremely popular. The financing subscription multiple reached 698.57 times, with the financing subscription amount reaching around HKD 400 billion, and the public offering portion attracted over 390,000 subscribers, with expected oversubscription exceeding 930 times.

Goal: Increase Overseas Revenue Share to 15% within 3 Years

The enthusiastic reception of the Hong Kong listing reflects, to some extent, the capital's confidence in HAITIAN FLAV's development prospects.

As a "soy sauce leader," HAITIAN FLAV possesses strong market competitiveness and profitability.

From 2011 to 2021, HAITIAN FLAV's revenue and net profit continued to grow. In 2021, the company's operating revenue and net profit attributable to shareholders reached CNY 25.004 billion and CNY 6.671 billion, respectively, with year-on-year growth of 9.71% and 4.18%.

In 2021, although HAITIAN FLAV's revenue and net profit continued to grow, the growth rate significantly slowed compared to the past decade.

In 2022, HAITIAN FLAV was embroiled in a "double standard" controversy, attracting significant market attention. Possibly affected by this incident, the company's operating revenue for that year was CNY 25.610 billion, a year-on-year increase of 2.42%, with growth further slowing; the net profit attributable to shareholders was CNY 6.198 billion, a year-on-year decrease of 7.09%. This marked the first annual decline in net profit attributable to shareholders since 2011.

In 2023, the company achieved operating revenue and net profit attributable to shareholders of CNY 24.559 billion and CNY 5.627 billion, respectively, representing year-on-year declines of 4.10% and 9.21%, marking the first annual decline in both revenue and net profit since 2011.

In September 2024, HAITIAN FLAV underwent a leadership change, with Chairman Pang Kang stepping back and Cheng Xue taking over, thus completing the handover.

After Cheng Xue took office, HAITIAN FLAV's operating performance reversed. In 2024, the company achieved operating revenue and net profit attributable to shareholders of CNY 26.901 billion and CNY 6.344 billion, respectively, with year-on-year growth of 9.53% and 12.75%. In the first quarter of this year, its operating revenue and net profit attributable to shareholders were CNY 8.315 billion and CNY 2.202 billion, respectively, with year-on-year growth of 8.08% and 14.77%, continuing the dual growth momentum of 2024 While reversing its operating performance, Cheng Xue is promoting HAITIAN FLAV's listing in Hong Kong. This goal is now about to be realized.

The main purpose of HAITIAN FLAV's IPO in the Hong Kong stock market is to advance globalization, enhance its international brand image, and improve competitiveness.

According to disclosures, approximately 20% of the raised funds will be used for product development and the research and development of cutting-edge technologies and process upgrades; about 30% will be used for capacity expansion, adopting new technologies, and digital upgrades of the supply chain; around 20% will be used to enhance the company's global brand image, expand sales channels, and improve overseas supply chain capabilities to increase the company's global influence; about 20% will be used to strengthen the company's sales network and enhance its penetration capabilities; and approximately 10% will be used as working capital and for general corporate purposes.

As early as 2023, HAITIAN FLAV initiated its internationalization by establishing HAITIAN International Investment. In 2024, HAITIAN International Investment further established HAITIAN International Trade and its wholly-owned subsidiary HADAY ID. HAITIAN FLAV is planning to promote capacity construction overseas, with plans to establish production bases in Indonesia (to be operational in 2025) and Europe, aiming to increase the proportion of overseas raw material procurement to over 50%.

However, currently, HAITIAN FLAV's overseas revenue proportion is relatively low.

The goal set by Cheng Xue and others is to increase the overseas market revenue proportion to 15% within three years. Based on an operating revenue of 27 billion yuan, the overseas market revenue target is approximately 4 billion yuan.

To drive growth in the overseas market, Cheng Xue and HAITIAN FLAV need to double their efforts