Haitian Earnings: Results Hit by Muted Demand, but Sales Growth to Accelerate in 2024

Wide-moat Foshan Haitian continues to navigate its strategy of widening its distribution channel and diversifying its product range to meet changing customer trends. This transition is weighing on Haitian’s performance more than we anticipated, with third-quarter revenue and profit slightly below our estimates. We keep our revenue projection for 2023 but lower our net income forecast to CNY 5.78 billion, from CNY 6.17 billion, to account for operating deleverage. Fourth-quarter margins should remain suppressed as the company continues to push through inventory adjustments and product transition. We expect revenue growth to rebound in 2024 as Haitian cycles a low base and inventory returns to a healthy level.