Growth Dragons Weekly: China Property Stimulus, Haitian & CR Beverage IPOs, TikTok & Temu Global Expansion
What happened in China this week:
China Housing Minister Stimulates Property Market After Declaring It Has Bottomed
China’s Largest Soy Sauce Brand, Haitian, Seeks Hong Kong Listing
Nongfu’s Big Competitor, CR Beverage, Seeks Hong Kong IPO
TikTok Grew 75%, But Losses Expanded: U.S. Ad Revenue Market Share Surpasses Instagram and Facebook
Temu Expands to Vietnam and Brunei, but Indonesia Bans It
Alibaba Develops Superior AI Translator, Able to Interpret Slang Like “YYDS”
#1 China Housing Minister Stimulates Property Market After Declaring It Has Bottomed
China's government officials have been holding press conferences more frequently, with Wednesday marking the fourth one this month—this time featuring the housing minister.
In a bid to stabilize the real estate sector and drive economic recovery, China has implemented a series of targeted measures to support the housing market while avoiding overstimulation. After three years of market adjustments, the government believes the sector has reached a turning point, signaling a potential rebound. These policy refinements focus on long-term stability, boosting market confidence, and providing financial support for development projects.
Here’s a summary of the policies:
"Four cancellations": Removal of purchase restrictions, sales restrictions, price caps, and the criteria for defining “ordinary” housing.
"Four reductions": Lower mortgage rates, reduced down payment ratios, unified mortgage rules, and a decrease in loan stock, with the mortgage rate cut saving households 150 billion yuan (US$21 billion) annually.
Launch of urban village and housing renovation projects through monetary resettlement, addressing areas with safety risks and high public demand.
Loans for "white list" projects have reached 2.23 trillion yuan (US$313 billion), expected to grow to 4 trillion yuan by year-end.
Between January and September, 1.48 million affordable housing units were built or allocated, with 4.5 million people expected to move in by year’s end.
In parallel with these measures, the government has committed to large-scale urban development and renovation projects aimed at improving access to quality housing for low-income families. These efforts include rebuilding projects and compensating affected residents through monetary resettlements. The "white list" projects focus on ensuring the timely completion and delivery of unfinished properties, helping restore market confidence among homebuyers.
In addition to housing measures, China also released its latest economic data. China's GDP grew by 4.6% year-on-year in the third quarter of 2024, surpassing the 4.5% forecast but slightly below the previous quarter's 4.7%. On a quarterly basis, the economy expanded by 0.9% in Q3, up from 0.7% in Q2.
There are also positive signs that China may achieve its growth target, with a rise in consumer spending. Key indicators such as retail sales and industrial production exceeded expectations. Retail sales grew by 3.2% year-on-year in September, up from 2.1% in August, while industrial output rose by 5.4%, improving from 4.5% the previous month. Fixed-asset investment increased by 3.4% over the first nine months of the year, matching the January-August growth rate. These numbers reflect renewed consumer activity and manufacturing momentum. If the housing measures prove effective, we could see stronger overall consumption and a potential impact on inflation, given the significant weight of housing in the CPI basket.
The housing ministry has declared that the market has "bottomed out" after a prolonged downturn, pointing to October’s data as a sign of recovery. With mortgage policies easing and more housing projects being delivered, both buyers and developers are slowly regaining confidence. Since China is focused on addressing systemic risks to ensure sustainable long-term growth, there is potential for the country to emerge even stronger over time.
#2 China’s Largest Soy Sauce Brand, Haitian, Seeks Hong Kong Listing
Foshan Haitian Flavouring & Food, one of China's largest condiment makers and a leader in the soy sauce market, is reportedly considering a secondary listing in Hong Kong, aiming to raise at least US$1.5 billion.
The Guangdong-based company is currently in discussions with advisers about a potential share sale in Hong Kong, which could take place in the first half of next year. Haitian’s Shanghai-listed shares have surged nearly 20% this year, pushing the company’s market value to around US$35 billion. Its shares trade at a price-to-earnings (P/E) ratio of 41 times in Shanghai, significantly higher than even Kweichow Moutai’s 24 times.
Founded in 1955, Haitian has become a household name in China, known for its wide range of staple condiments, including soy sauce, cooking oil, vinegar, and fermented bean curds. In recent years, it has expanded its product line to include hotpot sauce, lemon tea, and ice cream.
For FY2023, Haitian reported a 9.21% decline in net profit to RMB 5.6 billion, alongside a drop in revenue to RMB 24.6 billion from RMB 25.61 billion in 2022. This decline was partly due to negative social media backlash, where domestic consumers expressed dissatisfaction over claims that Haitian’s export products contained fewer additives than those sold locally. This led to some boycotts, impacting sales. Another factor was the overall decline in consumption within China, as fewer people dined out, reducing demand for Haitian’s condiments in restaurants and catering services.
Despite these setbacks, a recovery seems to be underway. In 1H24, Haitian reported a 9% increase in revenue. Haitian soy sauce remains a staple in Chinese households, used to enhance the flavor of daily meals. Additionally, increasing consumer spending, bolstered by rising tourism numbers and new dovish government policies, signals a potential rebound in demand.
Given its dominant market position, Haitian’s secondary listing could see strong investor interest, potentially mirroring the success of Midea’s H-shares IPO, which was oversubscribed and now trades at a premium to its A-shares—an uncommon occurrence for Chinese stocks. If Haitian proceeds with the Hong Kong listing, it could attract similar demand, reinforcing its status as a leading brand in China’s food condiment industry.
#3 Nongfu’s Big Competitor, CR Beverage, Seeks Hong Kong IPO
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