Haitong International has released a research report forecasting that Want Want China's (00151) revenue for FY2025-2027 will be RMB 24.05 billion, RMB 24.65 billion, and RMB 25.27 billion, respectively, representing year-on-year growth of 2.3%, 2.5%, and 2.5%. Net profit attributable to shareholders is projected to be RMB 4.17 billion, RMB 4.41 billion, and RMB 4.61 billion, with changes of -3.8%, +5.7%, and +4.6% year-on-year, corresponding to EPS of RMB 0.35, RMB 0.37, and RMB 0.39. Based on comparable company valuations, the firm assigns the company a FY2025 (fiscal year ending March 2026) P/E multiple of 15x, resulting in a target price of HK$5.76, implying a 15% upside potential from the closing price on December 24, 2025. This marks the initiation of coverage with an "Outperform" rating.
Having developed over six decades, Want Want China has become a nationally renowned leader in the food and beverage industry, with its business spanning multiple segments including rice crackers, dairy beverages, and snack foods. The company boasts a concentrated equity structure and stable internal governance, with most senior executives possessing extensive industry experience. Want Want actively engages in multi-faceted marketing, significantly enhancing its brand awareness through catchy advertising slogans and the creation of brand IP, making it a household name.
The pillar dairy beverage business, which contributes over half of total revenue, demonstrated a CAGR of approximately 3.7% from FY18 to FY24. Dairy beverages, combining attributes of both dairy products and soft drinks, have benefited from steady growth in consumer taste preferences in recent years. The neutral dairy beverage segment, home to the flagship product Wangzai Milk, enjoys favorable prospects and relatively moderate competition; the report forecasts dairy beverage revenue growth of 0.5%, 2%, and 2% for FY25-27. In the rice cracker business, new products already accounted for a double-digit percentage of revenue in H1 FY25, and further recovery is anticipated driven by new channels and products, with projected revenue growth of 3.5%, 2%, and 2% for FY25-27. Within the snack food category, candy revenue maintains relatively good growth, leading to forecasts for snack food revenue growth of 5%, 4%, and 4% for FY25-27. The company is actively seeking breakthroughs through organizational restructuring, expansion into emerging channels, and a push into overseas markets. Despite pressure on traditional channels, snack franchising, platform and content e-commerce, instant retail, and OEM channels are developing well. Furthermore, Asian markets are experiencing rapid growth driven by candy and pastry sales. The revenue contribution from non-traditional channels has increased from less than 10% in H1 2021 to approximately 35% in H1 2025, and these emerging channels and markets are expected to continue supporting revenue growth.
The company's gross profit margin improved in FY23-24 due to lower costs. It plans to adopt measures such as domestic substitution to counter rising imported milk powder prices, while costs for other major raw materials are largely controllable. Additionally, the company has strengthened control over channel expenses in recent years and optimized warehousing and logistics investments. Although the expense ratio faced temporary pressure in H2 FY24 due to organizational optimization efforts, the report expects operating profit margins for each category to recover after short-term pressure, with the overall EBIT margin forecasted at 23.8%, 23.9%, and 24.1% for FY25-27.
Risk warnings include intensifying industry competition, fluctuations in raw material prices, and food safety risks.