Haitian Flavouring and Food's performance rebounds, market value evaporates 480 billion over 5 years. Left hand raises 9.66 billion, right hand distributes a generous dividend of 7.95 billion, sparking controversy.

Ask AI · Huge fundraising followed immediately by dividends—what’s behind the funding strategy?

Yangtze Business News coverage ●Yangtze Business reporter Shen Yourong

“Huge-soy-sauce tycoon” Haitian Flavor Industry (603288.SH) has run far ahead, with operating performance growing against the tide.

On the evening of March 26, Haitian Flavor Industry disclosed its 2025 annual report. In 2025, the company’s operating revenue and net profit attributable to the parent were 28.873 billion yuan and 7.038 billion yuan, respectively; both hit record highs, with growth year over year.

Among peer companies, Zhongju High-Tech and Qianhe Flavor Industry have not yet disclosed their full-year 2025 operating conditions. In both companies, performance during the first three quarters fell sharply.

Haitian Flavor Industry’s main products include soy sauce, oyster sauce, seasoning sauces, and other products. The company says its soy sauce and oyster sauce market shares have ranked No. 1 nationwide for 10 consecutive years. In 2025, the company’s production and sales volumes for its three major products all increased, and its gross margin generally rose.

However, Yangtze Business reporter found that although Haitian Flavor Industry’s operating performance has reached a new high, its stock price has gone through roller-coaster action over the past seven years. Compared with its peak, the current share price is down about 68%, corresponding to a market value loss of about 480 billion yuan.

In June 2025, Haitian Flavor Industry completed its H-share listing, raising 9.660 billion yuan. The company accelerated its overseas business expansion. As of now, overseas business contributions are not yet visible in the composition of its operating revenue.

In 2025, Haitian Flavor Industry distributed a generous 7.950 billion yuan in dividends, with a dividend payout ratio as high as 112.95%.

With one hand raising a huge amount, and the other hand distributing lavish dividends, questions have been raised about Haitian Flavor Industry’s approach.

A financial loop driven by 856 million yuan in prepayments

Haitian Flavor Industry achieved record-high operating performance, but the financial report shows anomalies.

According to the annual report, in 2025, Haitian Flavor Industry achieved operating revenue of 28.873 billion yuan, up 7.32% year over year; and net profit attributable to the parent of 7.038 billion yuan, up 10.95%.

In 2025, the seasoning condiment market was in a competition over existing demand, with peers including Zhongju High-Tech running down inventory and Qianhe Flavor Industry’s performance falling sharply. Why did Haitian Flavor Industry’s operating performance grow significantly? The main reason was an increase in gross margin.

In 2025, revenue from soy sauce, oyster sauce, and seasoning condiments was 14.934 billion yuan, 4.868 billion yuan, and 2.917 billion yuan, respectively—up 8.55%, 5.48%, and 9.29%, respectively; gross margins increased by 4.03, 3.29, and 7.61 percentage points, respectively. This brought the gross margin of the company’s food manufacturing business back above 40%, reaching 41.78%, up 3.15 percentage points year over year.

The financial report discloses that Haitian Flavor Industry’s soy sauce and oyster sauce have maintained a market share of No. 1 nationwide for 10 consecutive years.

With gross margin rising, on the one hand it benefited from Haitian Flavor Industry’s pricing power stemming from its market position. On the other hand, raw material prices fell back. Public information shows that in 2025, the global average price of soybeans was about 4,800 yuan per ton, down roughly 10% from the historical peak in 2023. At the same time, packaging material prices (such as glass and plastics) also fell to varying degrees. In addition, Haitian Flavor Industry’s digital transformation also contributed to some extent. The Mingsheng Manufacturing Base was awarded the world’s first “Lighthouse Factory” in the soy sauce industry. Through technologies such as AI selecting soybeans and big-data fermentation, the company’s manufacturing expenses in 2025 fell by 9.98% compared with 2024.

However, although Haitian Flavor Industry’s other products’ revenue grew 14.55%, their gross margin declined by 1.97 percentage points. This indicates that in non-core areas, the company coped with market competition by sacrificing profit.

Overall, Haitian Flavor Industry’s competitiveness is prominent, and its operating performance in 2025 was quite strong.

However, there are still points worth paying attention to for Haitian Flavor Industry.

The financial report shows that by the end of 2025, some of the company’s suppliers had transferred a total of 261 million yuan in accounts receivable to Haitian Factoring. Haitian Factoring is an affiliated party of Haitian Flavor Industry. In addition, at period-end, as borrowers, distributors designated Jiaxing Haitian to pay 856 million yuan as advance payments to Haitian Flavor Industry; Jiaxing Haitian is also a borrower of Haitian Flavor Industry.

Jiaxing Haitian, Haitian Flavor Industry’s affiliated party, provides financing to downstream distributors. This money then flows into Haitian Flavor Industry and becomes advance payments for goods, forming a financial loop. This kind of “supply chain finance” helps improve distributors’ ability to purchase inventory, but to a certain extent it also makes Haitian Flavor Industry’s sales rely on credit granted by its affiliated parties. If distributors fail to consume inventory as expected, Jiaxing Haitian faces the risk of bad debts, which in turn may affect the stability of Haitian Flavor Industry’s channels.

In 2025, Haitian Flavor Industry added 923 distributors and reduced 928, resulting in a net decrease of 5. The total number of distributors at period-end was 6,702.

Controversy triggered by a large dividend

Although Haitian Flavor Industry’s operating performance created a new high, its share price did not set a new high along with it—it is instead in a trough.

On March 27, Haitian Flavor Industry’s A-shares surged 7.44%, closing at 39.70 yuan per share. Even so, the company’s share price remained relatively low.

The K-line chart after adjusting for pre- and post-corporate actions shows that over the seven years from March 2019 to March 2026, Haitian Flavor Industry’s share price has experienced roller-coaster behavior.

On January 8, 2021, the share price of Haitian Flavor Industry hit its historical peak at 219.58 yuan per share, or 124.12 yuan per share after adjusting for pre- and post-corporate actions. Compared with that, the current share price is down about 68%.

In terms of market capitalization, currently, the combined market cap of Haitian Flavor Industry’s A-shares and H-shares is about 230 billion yuan. Compared with the peak market cap of 711.5 billion yuan on January 8, 2021, about 480 billion yuan has evaporated.

In June 2025, Haitian Flavor Industry completed its H-share issuance and listing, successfully raising 9.660 billion yuan.

This IPO was highly sought after by capital. The public offering portion in Hong Kong received 918.2 times over-subscription. Among the cornerstone investors, top global institutions appeared, including Hillhouse Capital, Singapore Government Investment Corporation, and UBS Asset Management.

For listing in Hong Kong, Haitian Flavor Industry said it would accelerate internationalization. The company’s production bases in Indonesia and Vietnam were already in place in 2025, and it plans to use 20% of the fundraising to build global brands and optimize overseas supply chains.

In China’s domestic market, competition is over existing demand. Haitian Flavor Industry is trying to open up overseas markets such as Southeast Asia and the Americas.

Based on information disclosed in its financial reports, Haitian Flavor Industry’s overseas revenue has not yet formed a sufficient scale. Whether overseas expansion can meet expectations faces challenges.

Most questioned is cash dividends. Together with the interim dividend, in 2025 Haitian Flavor Industry would distribute a total of 7.950 billion yuan in cash dividends, accounting for 112.95% of net profit attributable to the parent for that year. This means it not only distributed all profits from that year, but also used retained earnings from prior years.

Moreover, Haitian Flavor Industry also committed that from 2025 to 2027, the proportion of total cash dividends in each year relative to net profit attributable to the parent for that year will be no less than 80%.

Such lavish dividends are closely related to Haitian Flavor Industry’s ample cash. As of the end of 2025, the company’s cash and funds plus investments and wealth-management products totaled 40.588 billion yuan. By comparison, interest-bearing liabilities of 219 million yuan are negligible.

In the domestic market, Haitian Flavor Industry’s core products have held the No. 1 market share for 10 consecutive years. With industry growth slowing, there is not much room to explore. This may be one of the reasons the company chose to distribute such large dividends.

Still, with plenty of money, Haitian Flavor Industry raised 9.660 billion yuan in the H-share market first, and then distributed 7.950 billion yuan shortly after—such an operation inevitably raises suspicion.

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