Key Takeaways:
Sichuan Teway has filed for a Hong Kong IPO, focused on the business of pre-mixed seasonings that are popular with today's younger Chinese
The company's revenue grew about 15% annually between 2022 and 2024, but contracted in the first half of this year, as it blamed the timing of the Lunar New Year holiday
At a time when many consumer stocks are offering bland valuations for investors, a notable exception has been condiment and seasoning makers, which may actually benefit during economic slowdowns as more people forgo eating out to cook at home. Makers of premixed spice combinations for cooking and popular eat-at-home hotpots look particularly well placed, catering to a younger generation that prizes convenience over traditional cooking from scratch.
Into that stew, Sichuan Teway Food Group Co. Ltd. (603317.SH) is hoping to sell investors on its ready-to-cook and hotpot seasonings business mix with its application last week for a Hong Kong IPO, which would complement its existing listing in Shanghai. The move would make Teway China's second major seasoning company to list in both markets, following a Hong Kong IPO by soy sauce titan Haitian Flavouring (3288.HK; 603288.SH) in June.
In one slightly inauspicious sign, Haitian's Hong Kong shares have actually fallen 13% since their trading debut through last Friday's close, bucking a broader trend that has seen the benchmark Hang Seng Index rise 8% over that time. But even after that decline, Haitian's Hong Kong shares still trade at a tasty price-to-earnings (P/E) ratio of 24, while its Shanghai-listed shares trade even higher at 32. By comparison, many retailers, restaurants and consumer product makers are barely trading in double-digit ratios these days.
Such high valuations is a common theme lately for seasoning stocks, which are benefiting as counter-cyclical plays in a slowing Chinese economy characterized by increasing consumer caution. Teway's Shanghai-listed shares trade at a P/E multiple of 24, while Qianhe Condiment and Food (603027.SH) trades at 28. And Guoquan (2517.HK), which ...
