Compound condiments are expected to accelerate in 2H26, but soy sauce still requires recovery; Goldman Sachs rates Jonjee Hi-Tech Sell

Overview

The report reviews Jonjee Hi-Tech's 2Q26 results and the management webcast held on August 20, focusing on soy sauce channel destocking, Weizimei integration, compound condiment expansion, the relaunch of products under new national standards, and cost changes. Goldman Sachs believes compound condiments may accelerate in 2H26, but soy sauce remains in the process of recovery; the higher sales forecasts did not fully translate into improved profit forecasts, and the target price associated with the Sell rating remains below the report price.

Core views

The company reported its 2Q26 results on August 19, after which Goldman Sachs attended the webcast on August 20. The soy sauce business was affected by channel destocking in 2Q: retail sell-through tracked by the company was broadly flat versus 1Q, but reported sales declined by more than ten percentage points quarter-on-quarter, indicating that a gap remains between end-market sales and channel shipments. Management also strengthened inventory controls for tier-one distributors, implying that near-term reported revenue may continue to be affected by channel inventory normalization, although this should help reduce inventory accumulation in the channel. From consolidation in March through June, Weizimei contributed approximately RMB70 million in revenue to the group, accounting for approximately a mid-single-digit percentage of group revenue, and less than RMB10 million in net profit. The product mix for online channels has largely been validated and is currently operating relatively smoothly. The foodservice channel, however, has shifted to a screened, higher-quality distributor network, but progress has been slower than expected because converting B2B customers for certain key SKUs takes time. This divergence indicates that the online business has entered a relatively smooth execution phase, while the foodservice channel remains constrained by the pace of customer migration and distributor network development. Regarding hotpot seasoning expansion, the company plans to use Panda Prince as the leading brand, with endorsement from Chubang in core regions such as Zhejiang, Fujian, Guangdong, Guangxi, and Hainan, where Chubang has strong brand recognition. The company has established a new team that will collaborate with the existing Weizimei and Meiweixian teams and selected distributors. It will first test the pricing, launch, and promotional model in Guangdong before rolling it out to other core regions over the next 2—3 months. Goldman Sachs therefore views compound condiments as a potential acceleration area in 2H26, although the actual pace will still depend on the results of the Guangdong test, distributor recruitment, and B2B customer conversion. For soy sauce, the company plans to relaunch clean-label and reduced-sodium products under the new national standards in 2H26, initially focusing on core sales regions before selectively expanding into new channels. Management believes the new products possess flavor-based competitive advantages. This plan provides a product-side catalyst for the recovery of soy sauce, but the report continues to describe soy sauce as being on a recovery track rather than having fully recovered, and Goldman Sachs considered soy sauce momentum weaker than that of chicken essence and other condiments when revising its forecasts. Weizimei's sales were broadly flat in 1H26, during which the company primarily advanced business integration, organizational coordination, and strategic planning. Management expects Weizimei to achieve year-on-year growth and make a more meaningful contribution in 2H26 as the investments made in the first half begin to bear fruit. Goldman Sachs currently expects overall condiment sales to grow 17% year-on-year in 2026, including 12% year-on-year sales growth for Meiweixian. This growth outlook mainly depends on the conversion of integration investments into results, volume growth in compound condiments, and the performance of categories such as chicken essence. On costs, management stated that the company improved its procurement mechanism in 2Q26 and achieved better cost savings, although the new national standards may result in additional costs. The company plans to keep cost pressures manageable in 2027 through internal measures; it would consider price increases only if raw-material price volatility significantly exceeds expectations and internal optimization proves insufficient. The company also expects gains from land disposals to continue contributing to profit in 2H26. Consequently, future profit will be affected both by the operating efficiency of the core business and by this non-operating contribution from land disposals. Goldman Sachs raised its 2026—2028 sales forecasts by approximately 1%—3%, primarily driven by the core condiment business, particularly chicken essence and other categories. However, due to weaker soy sauce momentum and expectations of higher selling and administrative expense ratios, net profit forecasts for the same period were still lowered by 0.4%—1.3%. The new revenue forecasts are RMB4.9675 billion for 2026, RMB5.3091 billion for 2027, and RMB5.6893 billion for 2028, compared with RMB4.8438 billion, RMB5.2491 billion, and RMB5.6450 billion previously. EPS forecasts are RMB0.91, RMB1.00, and RMB1.10, respectively, with the previous 2026 forecast at RMB0.92. The forecast table implies year-on-year growth of 18.3%, 26.3%, and 32.5% in 2026 revenue, EBITDA, and EPS, respectively, with the net profit margin rising from 12.8% in 2025 to 14.3% in 2026. However, spending limits the extent to which the higher sales forecasts flow through to net profit. Goldman Sachs slightly lowered its 12-month target price from RMB17.20 to RMB17.10, with the valuation methodology unchanged: applying an 18x P/E multiple to forecast 2027 EPS and discounting it to mid-2027 using a 10% cost of equity. The main body of the report states that the company currently trades at 20.4x and 18.7x P/E for 2026 and 2027, respectively, with forecast dividend yields of approximately 3% in 2026—2027. The target price is 8.1% below the report price of RMB18.61, so the report maintains a clearly bearish conclusion and assigns a Sell rating.

Analysis framework

Goldman Sachs first compared reported 2Q sales with retail sell-through to identify the impact of channel destocking. It then used information from the management briefing to assess, item by item, new soy sauce products, online and foodservice channels, Weizimei integration, the regional expansion of hotpot seasonings, procurement optimization, and gains from land disposals. These operating assessments were subsequently incorporated into the 2026—2028 revenue, expense, and profit forecasts, with the 12-month target price derived from forecast 2027 EPS and a target P/E multiple.

Methodology notes

• Valuation methodologyP/E and PEG valuation

  Target P/E valuation based on forecast 2027 EPS

  The report applies an 18x P/E multiple to forecast 2027 EPS and discounts it to mid-2027 using a 10% cost of equity, resulting in a 12-month target price of RMB17.10.

• Industry/sector analysis frameworkVolume-price decomposition

  Comparison of retail sell-through and channel shipments

  The report compares broadly flat retail sell-through with a sequential decline of more than ten percentage points in reported sales to determine that the decline in 2Q soy sauce revenue was primarily affected by channel destocking and inventory controls.

• Quantitative/factor/portfolio theoryMulti-factor model

  GS Factor Profile

  This framework calculates percentile rankings based on standardized rankings for forward growth, financial returns, and valuation metrics, and averages the growth, financial-return, and inverted-valuation percentiles to form a composite metric that provides context for the stock relative to the market and industry peers.

• Event-driven strategy and behavioral financeEvent-driven analysis

  M&A likelihood ranking framework

  Goldman Sachs combines qualitative and quantitative factors to classify potential acquisition targets into tiers 1 through 3. Jonjee Hi-Tech has an M&A rank of 3, corresponding to a low acquisition probability of 0%—15%, so M&A is not included in the target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Jonjee Hi-Tech (600872.SS)

  Subject of the report; compound condiments, Weizimei integration, and soy sauce product relaunches may generate growth in 2H26, but channel destocking and expense investments limit profit flow-through.

  Strengths

  The online product mix has largely been validated; improvements to the procurement mechanism have generated cost savings; management believes clean-label and reduced-sodium soy sauce products possess flavor-based competitive advantages.

  Weaknesses

  Reported soy sauce sales in 2Q declined by more than ten percentage points quarter-on-quarter; foodservice channel development was slower than expected; soy sauce momentum is weak, and selling and administrative expense ratios are expected to rise.

  Comparison

  The rating presented in the report is relative to other companies within Goldman Sachs' consumer staples coverage; no comparison of specific peer operating metrics is provided.

  Risks

  Upside risks to the Sell thesis include better-than-expected distributor recruitment, channel investment efficiency, consumer demand and product mix, operating efficiency, or competitive dynamics in soy sauce.

Key data

• 12-month target priceRMB17.10Previously RMB17.20; 8.1% downside from the report price of RMB18.61
• Reported 2Q26 soy sauce salesDown by more than ten percentage points quarter-on-quarterRetail sell-through tracked by the company was broadly flat versus 1Q over the same period, reflecting the impact of channel destocking
• Weizimei consolidation contributionApproximately RMB70 million in revenue and less than RMB10 million in net profitThe measurement period was from March through June; revenue accounted for approximately a mid-single-digit percentage of the group total
• 2026 condiment sales growth forecast17% year-on-year growthGoldman Sachs forecast
• 2026 Meiweixian sales growth forecast12% year-on-year growthGoldman Sachs forecast
• 2026—2028 revenue forecastsRMB4.9675 billion, RMB5.3091 billion, RMB5.6893 billionPreviously RMB4.8438 billion, RMB5.2491 billion, and RMB5.6450 billion, respectively; raised by approximately 1%—3% overall
• 2026—2028 EPS forecastsRMB0.91, RMB1.00, RMB1.10The previous 2026 forecast was RMB0.92; 2027 and 2028 were unchanged at the precision shown in the table
• 2026 growth and margin forecastsRevenue growth of 18.3%, EBITDA growth of 26.3%, EPS growth of 32.5%2026 EBITDA margin of 19.9% and net profit margin of 14.3%
• Valuation20.4x P/E in 2026 and 18.7x P/E in 2027Based on the main body of the report; forecast dividend yield of approximately 3% in 2026—2027
• Market capitalization and enterprise valueRMB14.6 billion, RMB14.3 billionThe report's key data also lists a market capitalization of approximately US$2.2 billion and enterprise value of US$2.1 billion
• M&A rank3Corresponds to a low acquisition probability of 0%—15% and is not included in the target price

Impact & implications

The report believes that the primary source of operating improvement in 2H26 may shift from soy sauce toward compound condiments, chicken essence, and contributions from Weizimei integration. Although new soy sauce products provide a recovery catalyst, channel destocking, costs associated with the new national standards, and new-product promotion will still require time. The combination of higher sales forecasts and lower net profit forecasts indicates that incremental revenue will be accompanied by higher selling and administrative investments, while profit realization will depend on channel efficiency, product mix, and internal cost optimization. The target price being below the report price directly supports the Sell rating.

Risks

• Faster-than-expected distributor recruitment could cause sales expansion and channel coverage to exceed the report's forecasts.
• If channel investments are more efficient and targeted, the drag from expenses on profit may be lower than expected.
• If the recovery in consumer demand and product mix are better than expected, revenue and earnings may exceed the report's forecasts.
• If improvements in internal operating efficiency produce higher-than-expected margins, this could represent upside risk.
• If competitive dynamics in the soy sauce market are better than expected, the recovery of the soy sauce business may accelerate.

What to watch

• Monitor the pricing, launch, and promotional tests for hotpot seasonings in Guangdong, as well as progress in replicating the model in other core regions over the next 2—3 months.
• Monitor whether Weizimei can resume year-on-year growth and increase its profit contribution in 2H26 following integration investments in 1H26.
• Monitor sell-through and channel expansion following the relaunch of clean-label and reduced-sodium soy sauce under the new national standards in 2H26.
• Monitor whether the gap between retail sell-through and reported sales narrows following inventory controls for tier-one distributors.
• Monitor the additional costs resulting from the new national standards, the effectiveness of internal cost reductions, and whether raw-material volatility triggers price increases.
• Monitor the actual contribution of land disposal gains in 2H26.