Huifa Food sells land to turn a profit

Zebra Consumer | Shen Tuo

In the first half of this year, Huifa Food achieved a turnaround from loss to profit, temporarily alleviating the operational pressure from last year's significant losses. However, this relied on gains from the disposal of idle land, and the non-GAAP net profit remained negative, indicating no substantial improvement in its core business.

Selling land is a one-time gain and not sustainable; there remains pressure for losses in the second half of the year. Looking at a longer cycle, due to intensified industry competition, continuous contraction in main revenue, and the decline of its group catering supply chain business, Huifa Food has reported losses four times in the past five years and still struggles to emerge from its operational quagmire.

Successful Turnaround

In the first half of 2026, Huifa Food (603536.SH) is expected to achieve a book turnaround, providing short-term relief from last year's heavy losses. However, this profitability lacks long-term sustainability.

Recently, the company announced that it expects its attributable net profit for the first half of the year to be between 3.2 million RMB and 4.0 million RMB, an increase of 33.1936 million RMB to 33.9936 million RMB compared to the same period last year, representing a year-on-year growth of approximately 110.67% to 113.34%. Meanwhile, the non-GAAP net profit is estimated to be between -6.5 million RMB and -5.0 million RMB, with the loss narrowing by 78.71% to 83.62% year-on-year.

The company believes that measures such as channel sinking, product portfolio driving, and reducing operations of low-yield supply chain projects have improved operational quality and profitability. It also pointed out that the sale of idle land use rights was a key factor in the performance improvement.

In the first quarter of this year, Huifa Food saw a 阶段性 recovery in operations, achieving an attributable net profit of 700,900 RMB and a non-GAAP net profit of 171,400 RMB. In contrast, during the same period last year, these two indicators showed losses of 18.0363 million RMB and 18.9966 million RMB, respectively.

During this period, the company's frozen food segment generated revenue of 328 million RMB, up 8.31% year-on-year. Among them, meatball products, fried products, sausage products, and skewer products generated revenues of 107 million RMB, 70 million RMB, 39 million RMB, and 23 million RMB, respectively, with year-on-year growth rates of 65.80%, 73.91%, 53.67%, and 19.53%.

The good performance in the first quarter did not fundamentally alleviate the operational pressure on the company's core business. The core issue may lie in the low-margin supply chain business continuously dragging down overall profitability, compounded by fixed costs such as labor and depreciation. Consequently, operations weakened again in the second quarter, and the core business has yet to form stable profitability.

4 Losses in 5 Years

In the frozen food industry, there is a saying: "South Anjing, North Huifa." However, this label only summarizes the regional layout of the two companies and does not imply equal strength.

In 2025, Anjoy Foods (603345.SH) had operating revenue exceeding 16 billion RMB, ten times that of Huifa Food. With products like fish paste, pre-made dishes, and fresh-lock packaging blooming in multiple areas, Anjoy is the absolute leader in national frozen hotpot ingredients. Huifa Food, rooted in Shandong, only has regional advantages in niche tracks such as poultry meatballs and grilled sausages, lacking nationwide production capacity and channel layout capabilities.

Huifa Food listed on the Shanghai Stock Exchange in 2017. Since then, its profitability has declined year by year, experiencing its first billion-level major loss in 2021. From 2021 to 2025, the company's attributable net profit showed 4 losses in 5 years, with only 2023 seeing a profit of 7.516 million RMB relying on government subsidies, etc. During this period, the non-GAAP net profit suffered five consecutive losses, with cumulative losses exceeding 645 million RMB.

Analysis reveals that the long-term weakness in the company's core business mainly stems from three factors.

First, the supply chain business faced policy impacts. This business is the company's second largest, generating 369 million RMB in revenue in 2021, a year-on-year surge of 102.57%, accounting for 22.35% of total revenue. However, its gross margin was only 8.30%, far lower than the 20.99% gross margin of the number one business, meatball products.

In 2025, domestic campus cafeteria policies were adjusted, with many regions promoting self-operated models and strictly controlling private enterprise outsourcing and 托管. School centralized procurement orders shrank significantly. That year, the company's main business revenue decreased by 516 million RMB year-on-year, and gross profit decreased by 86 million RMB, becoming one of the important factors for the year's losses.

Secondly, cross-boundary diversification scattered operational resources, and the diversified layout failed to cultivate a second growth curve. While the core business foundation was not yet stable, Huifa Food successively invested in pre-made dishes and crossed over into sugar-free tea. Theoretically, pre-made dishes could synergize with the frozen food core business and supply chain business, but this segment's operations continued to weaken, with revenue dropping from 154 million RMB in 2021 to 138 million RMB in 2025. Sugar-free tea has very low synergy with the traditional core business and was quickly drowned out by the market after listing.

Third is the involution of existing stock in the industry, with leading enterprises continuously sinking into lower-tier markets. The frozen food industry has a low technical barrier, and homogeneous products easily trigger price wars. Anjoy Foods, leveraging its scale advantage, aggressively expanded nationwide, already suppressing Huifa Food in the northern market.

Stock Era

The rise of the frozen food market is the result of various factors working together, including cold chain logistics, catering standardization, and the stay-at-home economy.

In 2025, China's frozen food market size exceeded 200 billion RMB, and the industry has shifted from incremental expansion to stock competition and quality/efficiency improvement stages.

Under the "one super, many strong" competitive landscape, Anjoy Foods sits firmly in the top spot, followed closely by Sanquan Food and Synear Food. Regional leaders can only enter lower-tier markets through price adjustments and local flavor localization.

In this severely involutionary market, most enterprises are under operational pressure. In 2025, among 8 listed frozen food enterprises, 7 saw a decline in attributable net profit. The declines for Qianwei Central Kitchen, Wufangzhai, and Haixin Food were all in double digits, while Huifa Food plummeted by 300%.

Under stock game conditions, the choices of industry leaders and regional enterprises are completely different. Anjoy Foods switched from pure channel expansion in the past to a product innovation-driven model, relying on continuous output of differentiated new products to hedge against price competition.

Limited by production capacity scale and channel shortcomings, and lacking cost and product advantages, Huifa Food can only passively accept the reality of the market being eroded by leaders.