Morningstar has reiterated its fair value estimate of HK$6.4 for WANT WANT CHINA (00151) while largely maintaining its earnings forecast for the company. The research firm continues to view the stock as undervalued, citing a projected 2025 dividend yield of 4.3% as a key factor.

WANT WANT reported its half-year results ending September 30, showing a 2.1% year-on-year revenue increase but a 7.8% decline in net profit, primarily due to lower gross margins and higher operating expenses. Morningstar noted that while revenue exceeded expectations, net profit aligned with projections.

The company has ramped up investments in new sales channels, temporarily pushing up its sales expense ratio. However, Morningstar remains unconcerned, believing these investments are crucial for long-term growth. Traditional wholesale and modern retail channel revenues fell by approximately 15-20% year-on-year, indicating a shift in consumer demand away from legacy products and conventional channels. Nevertheless, overall revenue growth remained positive, supported by new products in emerging channels.

WANT WANT is optimistic about expanding sales in segments like dairy products through discount stores, with this channel now accounting for 15% of total sales. Additionally, the company achieved positive growth in overseas markets, which Morningstar views favorably.