China's soy sauce star suffers a premium downgrade

Foshan Haitian Flavouring and Food Co

12/10/2022 04:37

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own.)
       HONG KONG, Oct 12 (Reuters Breakingviews) - Never
underestimate the power of China’s netizens. Foshan Haitian
Flavouring & Food  603288.SS , a $46 billion soy sauce maker, is
the latest to learn that lesson after videos went viral of
consumers questioning why its products sold in Japan have
simpler ingredients and no preservatives. Some even poured its
domestic product down the drain.
    Haitian, which with a 20% share of China’s market for
cooking's brown gold, dismissed the accusations as a smear
campaign. It says it complies with relevant food safety rules
and stressed that food additives are common and don’t imply
inferior quality. Investors are unconvinced, evaporating roughly
$8 billion, or 15%, of its market value in recent days.
    Even after the selloff, Haitian still trades at a
mouth-watering 41 times forecast earnings for the next 12
months, per Refinitiv. But it’s now much closer to the 36 times
fetched by Japanese peer Kikkoman  2801.T . Quality, whether
real or perceived, has a price. (By Yawen Chen)   
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 (Editing by Antony Currie and Thomas Shum)
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