WL DELICIOUS (09985) surged more than 5%, reaching HK$11.54 by the time of writing, with a trading volume of HK$33.98 million. Goldman Sachs initiated coverage with a "Buy" rating, citing attractive risk-reward valuation after a 30% pullback from April highs.

The report highlights that discount stores remain the fastest-growing sales channel, potentially contributing 25-30% of annual revenue, with a long-term target of 30-35%. Operating margins in this segment align with the company average, though competition is intense. Discount chains favor partnering with established brands like WL DELICIOUS, known for strong recognition and high product turnover. Rapid store expansions by these partners create significant growth opportunities through innovative product placement.

Goldman Sachs noted that SG&A expenses are expected to rise in H2 due to increased online-offline marketing campaigns, primarily supporting konjac and seaweed products—key growth categories. This forms part of strategic investments to enhance brand equity and market share.

Management reaffirmed its full-year sales target of approximately RMB 100 million. The company is actively seeking partners in Southeast Asia and has made progress in securing shelf space for konjac and seaweed products at major regional retailers like 7-11 and Lotus’s.