Text | Zhang Jiaru
Recently, Haitian Flavor, the "first brother of soy sauce", has completed the change of board of directors and senior executives, the most interesting of which is the change of the chairman's position, Pang Kang stepped down, and Cheng Xue became the chairman.
Pang Kang is the "soul of Haitian Flavor", who joined Haitian in 1982 and served as deputy manager, general manager, chairman and president of the company before stepping down. Cheng Xue joined the company in 1992 and has served as corporate planning director, vice president, executive vice president, vice chairman and executive president.
Judging from her resume, Cheng Xue joined Haitian 10 years later than Pang Kang, but she is also a veteran employee of the company for more than 30 years.
It is worth noting that at the general meeting of shareholders, 6 people, including Cheng Xue, were elected as directors, and Cheng Xue's number of votes and vote rate were the lowest among the 6 directors. In addition, judging from the voting situation of shareholders below 5%, Cheng Xue received the lowest number of votes and the proportion of consent.
With the lowest number of votes in the director election, what did Cheng Xue rely on to take over as chairman, and what are the challenges she faces?
The election of directors received the lowest number of votes, and the "working queen" took over as chairman
When it comes to Haitian Flavor, many people think of Haitian soy sauce. In the domestic soy sauce market, Haitian soy sauce market share has ranked first in the country for many years. In addition to soy sauce, Haitian Flavor also has core products such as oyster sauce, seasoning sauce, vinegar, and cooking wine.
Haitian can be traced back to the "Foshan Ancient Sauce Garden" at the end of the Qing Dynasty, and was named after the "Haitian (Ancient) Sauce Garden". In 1955, 25 powerful ancient sauce gardens in Foshan were strategically merged and reorganized to form "Haitian Soy Sauce Factory", which is the predecessor of today's Haitian Flavor Industry.
In 1982, at the age of 26, Pang Kang was assigned to the company as a college student and a senior economist as a deputy factory director, and under the leadership of Pang Kang, the company gradually moved towards a modern enterprise.
In 1995, the company was restructured and became the first employee-owned condiment company, involving more than 700 employees and a total of 70% employee shareholding. Pang Kang led employees to participate in the subscription, including 25-year-old Cheng Xue.
In terms of the latest shareholding structure, the 2024 semi-annual report shows that Cheng Xue is one of the actual controllers of Haitian Flavor, directly and indirectly holding a total of 12.53% of the company's shares, and the proportion of personal direct shareholding in the total share capital is 3.17%, making him the fourth largest shareholder of the company and the second largest individual shareholder after Pang Kang.
Holding shares in Haitian Flavor Industry has achieved Cheng Xue's net worth of 10 billion yuan and the title of "Queen of Workers".
In 2021, the "2021 Hurun China Professional Managers List" shows that Cheng Xue has become the "richest professional manager in China" with a wealth of 65 billion yuan, much higher than Fang Hongbo's 11 billion yuan and Dong Mingzhu's 5.9 billion yuan.
As the market value of Haitian Flavor has shrunk, Cheng Xue's wealth has shrunk.
In 2022 and 2023, Cheng Xue will receive 7.0577 million yuan and 6.6983 million yuan as vice chairman and executive president, which is higher than that of Pang Kang, the chairman and president at the time, and is the highest salary for the company's management.
With a fortune of tens of billions and an important position in Haitian Flavor Industry, Cheng Xue is extremely low-key, searching the Internet, and almost no videos of her events or public speeches can be found. Because of her recent appointment as the chairman of Haitian Flavor Industry, Cheng Xue has been widely concerned.
On September 19, Haitian Flavor held the first meeting of the sixth board of directors and elected the chairman of the company. Before the election of the chairman of the board, the company held a general meeting of shareholders and held the election of directors of the sixth board of directors.
According to the announcement of the resolution of the general meeting of shareholders, a total of 6 directors were elected to the sixth board of directors of Haitian Flavor, of which Cheng Xue received 4.139 billion votes, accounting for 99.5940% of the effective voting rights attending the meeting, both of which were the lowest among the 6 directors.
Haitian Flavor also disclosed the "voting situation of less than 5% of shareholders involved in major matters", and Cheng Xue received 87.7992% of the votes, which is not only the lowest among the six directors, but also the lowest among the management personnel including the elected independent directors and supervisors.
The director election received the lowest number of votes, Cheng Xue became the chairman, and Haitian Flavor ushered in a female chairman. Cheng Xue's promotion to chairman is inseparable from her achievements as executive president.
In the first half of the year, profits increased, and the "mid-life crisis" of Haitian Flavor Industry was unresolved
According to the announcement, Pang Kang's previous position was chairman and president, Cheng Xue's previous position was vice chairman and executive president, and he was elected as chairman of the board of directors, but did not take over as president, the company's former vice president Guan Jianghua was hired as president, and Cheng Xue's position as executive president The company did not disclose changes.
Looking at the historical annual report, at least from 2018 to 2021, there was no position of executive president in the management structure of Haitian Flavor, and Cheng Xue's job title was vice chairman and executive vice president.
In October 2022, Haitian Flavor experienced a "food additives turmoil", with revenue falling by 7.05% in the fourth quarter and net profit attributable to the parent company plummeting by 22.03%.
On December 12 of that year, Cheng Xue was appointed as the company's executive president, second only to Pang Kang in his position. In 2022 and 2023 after serving as the executive president, Cheng Xue's remuneration surpassed Pang Kang and became the highest salary in the management, which shows the importance of this position.
In 2023, Cheng Xue's first full year as executive president, Haitian Flavor's revenue fell by 4.10%, and the net profit attributable to the parent company fell by 9.21%, which is the first time that the company has experienced a double decline in annual revenue and profit since its listing in 2014.
In the first half of 2024, Haitian Flavor's performance data began to pick up, with revenue increasing by 9.18% year-on-year and net profit attributable to the parent company increasing by 11.52% year-on-year, both of which hit the highest values reported since listing.
Cheng Xue promoted Haitian Flavor Industry to make a series of reforms, and from the channel side, the company continued to clear out dealers with weak trading capabilities, and used digital means to empower dealers to operate stores in the sinking market; Leverage cost leadership to drive food and beverage channel growth.
On the product side, the company continued to construct the fourth, fifth, and sixth categories in addition to soy sauce, oil consumption, and soybean paste, promoted the development of vinegar, cooking wine, compound condiments, etc., and expanded healthy and differentiated categories.
In the first half of the year, the reform of Haitian Flavor Industry has been effective, and Cheng Xue handed over a remarkable report card, which is an important bargaining chip for her promotion to chairman.
However, the "mid-life crisis" encountered by Haitian Flavor Industry has not been completely resolved, both in terms of performance and secondary market performance.
Since 2021, Haitian Flavor's revenue and net profit have changed from double-digit growth to single-digit growth, and in 2023, it will decline in both revenue and profit. The performance growth rate in the first half of 2024 is also related to the low base in 2023.
For the 2024 annual target, Haitian Flavor has a certain expectation in the latest employee stock ownership plan: "the corresponding company performance assessment indicator of the 2024 plan is a year-on-year increase of no less than 10.8% in net profit attributable to the parent company", and the calculation of these indicators must exclude the impact of share-based payment expenses of employee stock ownership plans and employee incentive plans (if any).
In the first half of the year, Haitian Flavor's net profit attributable to the parent company increased by 11.52% year-on-year, and the non-net profit increased by 11.95%, which was higher than the assessed 10.8%. It is worth noting that at the shareholders' meeting on September 19, the employee stock ownership plan proposal was passed, but the proportion of shareholders below 5% voted against it exceeded 51%.
In the future, it is worth paying attention to whether the performance growth of Haitian Flavor Industry can be sustained.
In the secondary market, Haitian Flavor's share price is still in the low range since 2020, with a closing price of 38.6 yuan on September 25, 2024, and a total market value of 214.6 billion yuan, a gap of 480 billion yuan from the market value of nearly 700 billion yuan at its peak in January 2021.
During the period when Pang Kang served as the chairman, Haitian Flavor created a double growth in performance and market value. After Cheng Xue takes over as chairman, we will continue to pay attention to whether he can lead the company to a higher level.