Core Insights - The FBIF Food Innovation Expo 2025 showcased over 700 exhibitors across various sectors, including dairy, beverages, snacks, and functional foods, covering an exhibition area of over 62,000 square meters [1][2][4] - The event attracted more than 39,000 visitors from over 6,500 companies, with over 35% of attendees being senior management [3][4] Group 1: Event Overview - The FBIF Food Innovation Expo serves as a professional platform for food companies to showcase innovations and connect with industry leaders [1] - The exhibition featured three main areas: Hall 4.2, Hall 5.2, and Hall 6.2, facilitating efficient connections across the supply chain [1][2] Group 2: Audience and Exhibitor Feedback - The audience comprised over 39,000 visitors, with 13,975 senior management personnel, accounting for 35.67% of the total [3] - Exhibitors reported high-quality interactions, with many expressing intentions to secure booths for the next year [4][5] Group 3: Media Coverage - The event received extensive media coverage, with participation from 88 mainstream and industry-specific media outlets, including major platforms like CCTV and Xinhua [7] - Influencers and bloggers shared content across social media platforms, enhancing the event's visibility [13] Group 4: Best Booth Awards - The awards recognized outstanding booth designs, with categories such as Best Overall Booth, Best Visual Impact, and Best Cultural Feature [18][19][21] - Notable winners included Yili for Best Overall Booth and Wangwang for Most Popular Booth, showcasing innovative and engaging designs [19][24] Group 5: Exclusive Activities - The event featured exclusive activities like the FBiF Channel Matching Conference and Foodtalks Salon, which facilitated networking and knowledge sharing among industry professionals [74][106] - The FBiF Channel Matching Conference attracted 1,207 suppliers, focusing on specialized content and enhanced visitor experience [74][75] Group 6: Global New Product Showcase - The FBiF Global New Product Collection highlighted over 650 innovative food products, with top selections including unique beverages and snacks that captured audience interest [140][142] - Products like the HPP Cold Brew Tea and the TAKEO Cricket Rice Cake stood out for their creativity and appeal [142][159] Group 7: Creative Packaging Showcase - The FBiF Global Creative Packaging Collection featured 160 innovative packaging designs from 30 countries, emphasizing sustainability and aesthetic appeal [162][166] - Noteworthy designs included edible packaging and unique cultural representations, attracting significant attention from attendees [166][171]

Investment Rating - The report assigns a "Buy" rating for the company [9]. Core Insights - The company has a solid industry leadership position, with a focus on product innovation and channel reform to drive growth. The financial performance shows a stable revenue increase and a rebound in profitability, supported by effective cost management and expansion into overseas markets [4][9]. Financial Summary - For FY2023, the company reported revenue of 23,586.33 million CNY, with a year-on-year growth of 2.87%. The net profit attributable to the parent company was 3,990.47 million CNY, reflecting an 18.36% increase from the previous year. The earnings per share (EPS) for FY2023 was 0.34 CNY, with a price-to-earnings (PE) ratio of 12.88 and a price-to-book (PB) ratio of 3.13 [2][4]. Business Performance - The company has shown a compound annual growth rate (CAGR) of 2.55% in revenue and 4.21% in net profit from FY2017 to FY2023. The gross profit margin for FY2023 was 46.60%, and the return on equity (ROE) was 25.73% [4][36]. Market Trends - The report highlights a shift towards health-oriented products, with significant growth in the health snack segment, which is expected to grow at a CAGR of 7.20%. The company is also expanding its presence in e-commerce and overseas markets, which are projected to contribute to future revenue growth [3][4]. Product and Channel Strategy - The company is focusing on product innovation, with a strong emphasis on health and wellness trends. It is also reforming its distribution channels to enhance efficiency and reach, including a significant push into e-commerce and international markets [3][4][9].

Group 1 - Wangwang invested RMB 138 million in a business jet to facilitate management's domestic and international travel, with a focus on expanding overseas operations [1] - In the fiscal year 2023, Wangwang's overseas business grew by double digits, with snack revenue reaching RMB 5.977 billion, accounting for approximately 20% of total revenue [1] - Southeast Asia has become a primary target for Chinese snack brands due to its large population and cultural similarities, with many brands already establishing a presence in the region [2][5] Group 2 - Companies like Qiaqia, Jinzhai, and Panpan have successfully penetrated the Southeast Asian market, with Qiaqia's Thailand subsidiary contributing RMB 400 million in revenue and nearly RMB 90 million in net profit in 2023 [2] - The Southeast Asian snack market is projected to reach USD 13.1 billion by 2029, with a compound annual growth rate of 10.60% [3] Group 3 - Salted snacks and other unique Chinese products are gaining traction in Southeast Asia, with brands like Yanjin and Qiaqia focusing on local market education to introduce their products [11][12] - The entry strategies of Chinese snack brands vary by country, with some targeting mature markets like Thailand and Singapore, while others focus on emerging markets like Vietnam and Indonesia [11] Group 4 - The retail landscape in Southeast Asia is diverse, with traditional community stores still dominating in Indonesia, where 80% of consumption occurs outside modern retail channels [17] - Successful market entry often relies on innovative channel strategies, as demonstrated by the ice cream brand Aice, which focused on community stores rather than traditional retail [14] Group 5 - Compliance with local regulations is crucial for market entry, with specific requirements for product certification and labeling in countries like Thailand and Indonesia [27] - Localization of products and supply chains is essential for success, with brands adapting flavors and ingredients to meet local preferences [28][31]

Core Viewpoint - The rise of online shopping and live-streaming sales has significantly transformed consumer behavior and retail dynamics, leading to challenges for traditional brick-and-mortar stores [1][3]. Group 1: Industry Transformation - Online shopping has made it possible for consumers to purchase a wide variety of goods from home, contributing to the decline of physical retail stores, many of which have closed or transitioned to online platforms [3]. - Despite the convenience of online shopping, there remains a unique enjoyment in visiting supermarkets, which offer a sensory experience and a break from the high-intensity work life [3][5]. Group 2: Company Background - Wangwang Group, originally established as Yilan Food Industry Co., Ltd. in 1962, has evolved into a significant player in the snack food market, particularly known for its iconic products like Wangzai milk and various snacks [9][7]. - The company was founded by Cai Zhangshi and later transformed by his son, Cai Yanming, who took over management at a young age and aimed to shift the company from a low-margin OEM model to developing its own brand [9][10][12]. Group 3: Business Strategy and Growth - After initial struggles with product development and market fit, Cai Yanming successfully pivoted the company towards producing rice crackers, which became a key product and led to the rebranding as Wangwang Group [24][22]. - The opening of the Chinese market during the reform era provided a significant opportunity for Wangwang Group, allowing it to become the first Taiwanese company to register a trademark in mainland China and rapidly expand its operations [26][28]. - The company's strategic expansion into mainland China has resulted in substantial growth, establishing it as a leading food company in Asia and contributing to Cai Yanming's status as a wealthy entrepreneur [28][29]. Group 4: Current Position and Philosophy - Today, Wangwang Group continues to innovate and develop new products, maintaining a strong market presence and consumer loyalty [29]. - Cai Yanming emphasizes a commitment to being a responsible and patriotic entrepreneur, aligning the company's values with a broader national identity [31].

Core Viewpoint - The financial reports of major food and beverage companies in China for 2024 show modest revenue growth, indicating a competitive landscape where established players are adapting to market changes and consumer preferences [1][4][9]. Group 1: Revenue Performance - Unified Enterprises China reported total revenue of 30.332 billion yuan, a year-on-year increase of 6.1% [1]. - Nongfu Spring's total revenue reached 42.896 billion yuan, growing by 0.5% year-on-year [1]. - Master Kong's revenue was 80.651 billion yuan, with a growth of 0.3% [1]. - China Foods reported 41.492 billion yuan in revenue, up 0.21% year-on-year [1]. - Haitian Flavoring's revenue was 26.901 billion yuan, reflecting a 9.53% increase [1]. - The revenue growth of these companies translates to significant absolute increases, with Unified Enterprises China adding 1.741 billion yuan, Master Kong adding 233 million yuan, and Nongfu Spring adding 229 million yuan compared to 2023 [1]. Group 2: Business Adaptation - Nongfu Spring experienced a 21.3% decline in its core bottled water segment, which dropped from 47.5% to 37.2% of total revenue, while its tea beverage segment grew by 32.3%, increasing its share from 29.7% to 39% [3][4]. - The shift in revenue sources illustrates how companies like Nongfu Spring are adapting to market fluctuations by reallocating resources to more profitable segments [3][4]. Group 3: Industry Trends - Companies with annual revenues exceeding 20 billion yuan are increasingly diversifying their business lines to maintain growth and fend off competition [4][5]. - The average revenue of companies in this category is significant, with the 500th ranked company on the China Private Enterprises 500 list having a revenue of 26.3 billion yuan [5]. - The historical context shows that these companies have evolved over decades, adapting to market changes and consumer demands, which has allowed them to emerge as industry leaders [5][6]. Group 4: Growth Strategies - The transition from "quantity" to "quality" in the consumer market from 2013 to 2024 highlights the need for companies to innovate and adapt to changing consumer preferences [8][9]. - The overall revenue of major food and beverage companies has shown slight fluctuations but maintains a growth trend, indicating resilience in the face of market challenges [9][10]. Group 5: Long-term Growth Metrics - The compound annual growth rate (CAGR) for major companies from 2013 to 2023 shows varied performance, with Nongfu Spring leading at 15.39% and others like Wahaha and China Wangwang showing negative growth [17][19]. - The average CAGR for the 14 companies analyzed is 6.48%, comparable to global top-tier companies during the same period [19][20]. Group 6: Market Expansion - Companies are increasingly looking to international markets for growth, with Wan Zhou International's acquisition of Smithfield Foods exemplifying a successful global expansion strategy [63]. - Mengniu's acquisition of the Southeast Asian ice cream brand Aice demonstrates the potential for growth in international markets [64].

Investment Rating - The report indicates a positive investment outlook for the Chinese snack industry, highlighting a "golden period" characterized by simultaneous growth in volume and price, driven by health, scenario-based consumption, and digitalization [2][6]. Core Insights - The Chinese snack industry is experiencing a "volume and price increase" phase, with a steady market growth trajectory. The market size is projected to reach 1.4 trillion RMB by 2024, recovering from a growth rate slump during 2020-2022, which saw a mere 0.8% increase in 2022 [2][6]. - The current market structure is layered into three segments: foundational categories supporting the market, emerging categories breaking through, and long-tail categories gaining momentum. Traditional giants are urged to seek high-end upgrades, while new entrants should focus on health transformation [9][12]. - The market is characterized by a "strong head, weak long tail" dynamic in 2023, necessitating traditional categories to innovate through scenarios to extend their lifecycle, while health-focused niches present structural opportunities [2][9]. - Offline channels dominate the snack distribution landscape, with hypermarkets accounting for over 40% of the market share, supermarkets around 24%, and e-commerce channels approximately 20%, which is gradually declining [2][26]. Summary by Sections Current Status of the Snack Industry - The snack industry is undergoing a channel transformation that is generating new growth opportunities. The rise of hypermarkets is particularly noteworthy, as they leverage high turnover efficiency to offer competitive pricing [6][34]. Channel Transformation - The report outlines a significant shift in the snack sales channels over the years, evolving from traditional distribution networks to large chain stores, and now to hypermarket sales models. This transformation is expected to continue, with hypermarkets projected to reach a market size of 1,040 billion RMB by 2024 [25][26]. Analysis of Representative Companies - **Mingming Hen Mang**: Following a merger, the brand's sales are expected to surge from 23.865 billion RMB in 2023 to 55.5 billion RMB in 2024, marking a growth of over 130%. The company serves approximately 5.9 million consumers daily [2][56]. - **China Wangwang**: The company faces challenges with its core product, Wangzai Milk, which accounts for 90% of its revenue in the dairy segment. The revenue for the first half of 2024 is projected to decline by 1.6% year-on-year [2][60]. - **Three Squirrels**: The company has seen a decline in revenue from 9.79 billion RMB in 2020 to 7.12 billion RMB in 2023, primarily due to the fading e-commerce boom and high costs of offline expansion. However, a recovery is anticipated in 2024 with a projected revenue of 10.2 to 10.8 billion RMB, driven by a strategy focused on high-end value and omnichannel sales [2][64].

Revenue Performance - Revenue for the six months ended September 30, 2024, was RMB 10,876,637, a decrease of 3.5% compared to RMB 11,274,818 for the same period in 2023[19]. - In the first half of FY2024, the Group's total revenue declined by 3.5% year-on-year to RMB 10,876.6 million, primarily due to a decrease in revenue from the popsicles sub-category under the snack foods segment[24]. - For the first half of FY2024, the Group's total revenue declined by 3.5% to RMB10,876.6 million, with dairy products and beverages accounting for approximately 55% and rice crackers and snack foods for about 44% of total revenue[39][43]. - For the six months ended September 30, 2024, the Group's total revenue reached RMB 10,876,637,000, with segment revenues of RMB 2,057,382,000 from rice crackers, RMB 6,009,418,000 from dairy products and beverages, RMB 2,730,970,000 from snack foods, and RMB 78,867,000 from other products[199]. Profitability Metrics - Gross profit increased by 0.8% to RMB 5,141,311, resulting in a gross profit margin of 47.3%, up from 45.2%[19]. - Operating profit rose by 2.6% to RMB 2,540,711, with an operating profit margin of 23.4%, compared to 22.0% in the previous year[19]. - Profit attributable to equity holders of the Company increased by 7.6% to RMB 1,863,371, with a profit margin of 17.1%, up from 15.4%[19]. - Basic and diluted earnings per share improved to 15.78 RMB cents, an increase of 8.2 percentage points from 14.58 RMB cents[19]. - Net profit attributable to equity holders of the Company increased by 7.6% year-on-year to RMB 1,863.4 million for the first half of FY2024[25]. - Profit for the period reached RMB 1,862,321, representing a growth of 7.8% from RMB 1,727,186 in the prior year[135]. Cost and Expense Management - The cost of sales decreased by 7.1% to RMB5,735.3 million in the first half of FY2024, attributed to a year-on-year decrease in the unit cost of key raw materials and packaging materials[58]. - Distribution costs amounted to RMB1,368.8 million, a decrease of 7.2% year-on-year, with distribution costs as a percentage of revenue decreasing by 0.5 percentage points to 12.6%[75]. - The finance costs decreased by 38.2% to RMB92.32 million in the first half of FY2024, due to the replacement of higher interest USD borrowings with lower interest RMB borrowings[78]. - The income tax expense for the first half of FY2024 was RMB643.0 million, with an income tax rate of 25.7%, a decrease of 1.3 percentage points compared to the same period last year[79]. Inventory and Receivables Management - Inventory turnover days improved to 77 days from 81 days, while trade receivables turnover days remained stable at 14 days[18]. - Trade payables turnover days increased to 32 days from 29 days, indicating a change in payment practices[18]. - Trade receivables increased to RMB 879,292,000 from RMB 832,245,000, indicating a growth of approximately 5.66%[120]. Market and Product Development - The Company is focusing on market expansion and new product development to drive future growth[17]. - The Company continues to invest in research and development to enhance product offerings and maintain competitive advantage[17]. - Emerging channels, such as vending machines and OEM, continued to grow, with overseas markets achieving double-digit revenue growth[24]. - New products launched over the past five years contributed a double-digit percentage to the Group's revenue for the first half of FY2024[24]. - The Group plans to launch more low-sugar and reduced sugar beverages in the second half of FY2024, responding to rising health awareness and changing consumer preferences[41]. - The rice crackers segment will introduce various Chinese New Year themed gift packs to capitalize on the upcoming peak sales season[42][45]. Financial Position and Cash Flow - As of September 30, 2024, the Group's net cash amounted to RMB 9,094.1 million, a decrease of RMB 1,561.1 million from RMB 10,655.2 million as of March 31, 2024, primarily due to the payment of a dividend of US$ 390 million (RMB 2,766.9 million)[89]. - The Group's total borrowings as of September 30, 2024, amounted to RMB 6,330.8 million, an increase of RMB 979.7 million from RMB 5,351.1 million as of March 31, 2024, with 98% being RMB denominated borrowings[89]. - The net cash outflow from financing activities for the first half of FY 2024 was RMB 1,891.9 million, mainly due to dividend payments[92]. - Cash and bank balances decreased to RMB 7,854,897,000 from RMB 8,421,346,000, representing a decline of about 6.73%[120]. Organizational and Structural Changes - The Group is undergoing organizational restructuring to enhance market responsiveness and implement its diversification strategy[26]. - The average number of employees decreased by 1,021 to approximately 38,866 for the first half of 2024FY[108]. - The Group invests significantly in continuing education and training programs for its employees[109]. Financial Risks and Management - The Group's activities expose it to various financial risks, including market risk, credit risk, and liquidity risk[169]. - The liquidity risk management policies have remained unchanged since the last year-end[170]. - The Group's financial risk management information should be read in conjunction with the annual consolidated financial statements as of March 31, 2024[170].

Financial Performance - Revenue for the six months ended September 30, 2024, was RMB 10,876,637 thousand, a decrease of 3.5% compared to RMB 11,274,818 thousand for the same period in 2023[2] - Gross profit increased by 0.8% to RMB 5,141,311 thousand, resulting in a gross margin of 47.3%, up from 45.2%[2] - Operating profit rose by 2.6% to RMB 2,540,711 thousand, with an operating margin of 23.4%, compared to 22.0% in the previous year[2] - Profit attributable to equity holders increased by 7.6% to RMB 1,863,371 thousand, with a profit margin of 17.1%, up from 15.4%[2] - Basic and diluted earnings per share were RMB 15.78, an increase of 8.2% from RMB 14.58[2] - The company reported a total comprehensive income of RMB 1,791,025 thousand for the period, compared to RMB 1,554,838 thousand in the previous year[5] - The profit before tax for the group was RMB 2,505,340 thousand, with a net profit of RMB 1,862,321 thousand after tax expenses of RMB 643,019 thousand[32] Assets and Liabilities - Total assets as of September 30, 2024, were RMB 26,807,669 thousand, down from RMB 27,457,068 thousand as of March 31, 2024[7] - Total liabilities increased to RMB 11,401,949 thousand from RMB 11,051,330 thousand[18] - Cash and bank deposits amounted to RMB 7,854,897 thousand, a decrease from RMB 8,421,346 thousand[7] - The group's total assets as of September 30, 2024, amounted to RMB 26,807,669 thousand, with cash and bank deposits totaling RMB 7,854,897 thousand[34] - The group reported a total liability of RMB 11,401,949 thousand, with borrowings included in the total liabilities amounting to RMB 6,330,802 thousand[34] - As of September 30, 2024, the total borrowings of the company amounted to RMB 6.3308 billion, an increase of RMB 0.9797 billion from RMB 5.3511 billion as of March 31, 2024, primarily consisting of RMB borrowings (98% of total borrowings)[81] - The net equity debt ratio as of September 30, 2024, was -0.59 times, compared to -0.65 times as of March 31, 2024, indicating a healthy cash flow and sufficient cash reserves to meet repayment needs[81] Revenue Breakdown - For the six months ended September 30, 2024, total revenue reached RMB 10,876,637 thousand, with the largest contribution from dairy and beverage products at RMB 6,009,418 thousand, accounting for approximately 55.3% of total revenue[32] - Revenue from the snack segment for the six months ended September 30, 2024, was RMB 2,730,970 thousand, showing a slight decrease from RMB 3,031,829 thousand in the same period of the previous year[32][36] - Revenue from the rice snacks category was 2.0574 billion RMB, remaining flat with low single-digit growth in sales, driven by diversified channel development and double-digit growth in emerging channels[60] - Revenue from dairy and beverage categories was 6.0094 billion RMB, a year-on-year decline of 1.4%, with milk sales remaining flat but showing low single-digit growth in canned milk revenue due to increased sales points[63] - Revenue from the leisure food category was 2.7310 billion RMB, a decline of 9.9% year-on-year, primarily due to poor performance in ice products[65] Market and Strategic Focus - The company continues to focus on expanding its market presence in North America, East Asia, Southeast Asia, and Europe[21] - Emerging channels, including vending machines and e-commerce, showed double-digit revenue growth in the first half of fiscal year 2024[54] - The overseas market achieved double-digit revenue growth, driven by new customers and products, with significant growth in regions such as Asia and the Americas[55] - The company plans to launch more low-sugar and health-oriented products in the second half of fiscal year 2024 to meet changing consumer preferences[58] - The group plans to continue expanding product categories and specifications, focusing on automation and channel diversification to enhance profitability[69] Operational Efficiency - The inventory turnover days decreased from 81 days to 77 days, reflecting improved supply chain and working capital efficiency[87] - The trade receivables turnover days increased from 13 days to 14 days as of September 30, 2024[88] - The trade payables turnover days increased from 29 days to 32 days as of September 30, 2024[91] Employee and Compensation - The average number of employees for the first half of the 2024 fiscal year was approximately 38,866, a decrease of 1,021 from the previous fiscal year[92] - The total compensation for employees in the first half of the 2024 fiscal year was RMB 2.2163 billion, a slight decrease of RMB 1.07 million compared to the same period last year[92] Capital Expenditure - The group's capital expenditure for the six months ended September 30, 2024, was RMB 358,951 thousand, with the highest expenditure in the snack segment at RMB 52,203 thousand[32] - The capital expenditure for the first half of the 2024 fiscal year was RMB 0.3590 billion, down from RMB 0.4057 billion for the previous fiscal year, primarily for upgrading production facilities[83] - The company purchased a business jet for USD 19.4 million, which was recorded as capital expenditure in the first half of the 2024 fiscal year[100] Financing and Costs - Financing costs decreased by 5.701 million RMB, down 38.2% to 92.32 million RMB, due to the replacement of higher-interest dollar loans with lower-interest RMB loans[76] - The net cash position as of September 30, 2024, was 9.0941 billion RMB, a decrease of 1.5611 billion RMB from March 31, 2024, primarily due to dividend payments[79] Depreciation and Asset Management - The group's non-current assets included property, plant, and equipment depreciation of RMB 367,490 thousand for the six months ended September 30, 2024[32] - The new replacement cost of the aircraft (excluding interior) is set at $43.9 million, which includes a transaction cost assumed to be 3.3% of the aircraft price[104] - The new replacement cost of the aircraft interior is $2.3 million, equivalent to its original purchase cost[104] - The condition-based depreciation rates for the aircraft (excluding interior) and aircraft interior are set at 45% and 10%, respectively, based on their remaining useful life and condition during inspection[104]

Company Listing and Stock Information - Want Want China Holdings Limited is listed on the Hong Kong Stock Exchange with the stock code 0151[1] - The company's Taiwan Depositary Receipts were listed on the Taiwan Stock Exchange Corporation on April 28, 2009, and voluntarily withdrawn from listing on October 15, 2013[12] - The company was listed on the Hong Kong Stock Exchange on March 26, 2008[12] - The company's subsidiary, Want Want Holdings Ltd., was listed on the Singapore Exchange Securities Trading Limited in May 1996 and delisted in September 2007[12] Financial Performance and Highlights - Gross margin for FY2023 was 43.9%, showing a slight decrease from 46.6% in FY2022 and 44.8% in FY2021[33] - Revenue for the fiscal year 2024 reached RMB 23,586,327 thousand, with a profit before income tax of RMB 5,405,467 thousand and an income tax expense of RMB 1,422,288 thousand[36] - Profit for the year 2024 was RMB 3,983,179 thousand, with RMB 3,990,474 thousand attributable to equity holders of the company and RMB 7,295 thousand to non-controlling interests[36] - Total assets for 2024 were RMB 27,457,068 thousand, with non-current assets at RMB 14,571,187 thousand and current assets at RMB 12,885,881 thousand[37] - Total equity for 2024 was RMB 16,405,738 thousand, while total liabilities were RMB 11,051,330 thousand[37] - Total revenue for 2023FY grew by 2.9% year-on-year to RMB23,586.3 million, with dairy products and beverage segment revenue increasing by 7.4% year-on-year[47] - Gross profit margin increased by 2.7 percentage points year-on-year to 46.6%, driven by lower costs of key raw materials and optimized production labor strategies[48] - Profit attributable to equity holders of the Company increased by 18.4% year-on-year to RMB3,990.5 million, with the margin of profit attributable to equity holders rising by 2.2 percentage points to 16.9%[48] - Inventory turnover days decreased by 9 days compared to the previous year, leading to a shorter cash conversion cycle by 11 days (average 65 days in 2023FY)[49] - Cash generated from operations increased by RMB1,167.7 million year-on-year to RMB6,752.9 million in 2023FY, driven by improvements in working capital efficiency and profit before tax[49] - Total revenue for FY2023 increased by 2.9% year-on-year to RMB 23.5863 billion, with dairy and beverage revenue growing by 7.4% and candy sub-category revenue reaching a historical high[50] - Gross profit margin for FY2023 rose by 2.7 percentage points to 46.6%, driven by lower prices of some bulk raw materials and packaging materials, and optimized labor strategies[50] - Net profit attributable to equity holders increased by 18.4% year-on-year to RMB 3.9905 billion, with the profit margin rising by 2.2 percentage points to 16.9%[50] - Inventory turnover days decreased by 9 days, leading to a 11-day improvement in cash conversion cycle, with average cash conversion cycle at 65 days in FY2023 compared to 76 days in FY2022[50] - Operating cash flow increased by RMB 1.1677 billion year-on-year to RMB 6.7529 billion in FY2023[50] - Traditional channels resumed growth with high single-digit growth in milk sub-category and double-digit growth in beverages sub-category[52] - Modern channels grew by low-to-mid single-digit in revenue, with significant growth in dairy products and beverages segment[53] - Emerging channels maintained high single-digit growth, with vending machine channel achieving double-digit growth driven by new smart models[54] - OEM channel revenue achieved rapid year-on-year growth in 2023FY, benefiting from the Group's production capability and capacity advantage across multiple product categories such as dairy products, beverages, maternal products, rice crackers, and candies[57] - Overseas revenue achieved mid-to-high teen growth rate in 2023FY, with significant progress in developing overseas markets for candy products[57] - Total revenue for 2023FY grew by 2.9% year-on-year to RMB23,586.3 million, with dairy products and beverages segment growing by 7.4% to RMB11,955.6 million[65] - Revenue from the rice crackers segment grew by 2.3% year-on-year to RMB5,976.9 million, driven by continuous growth in overseas markets and emerging channels[65] - Revenue from the snack foods segment decreased by 5.5% year-on-year to RMB5,501.8 million, while the candies sub-category achieved a record high in revenue for the year[65] - The Group's products maintained a balanced development trend, with rice crackers and snack foods segments accounting for 49% of total revenue, and dairy products and beverages segment accounting for 51% in 2023FY[65] - Revenue from the rice crackers segment grew by 2.3% year-on-year to RMB5,976.9 million in 2023FY, with overseas markets and emerging channels contributing 20% and 10% respectively, both maintaining double-digit growth[66] - The new product "Little Rice Crunch" achieved revenue exceeding RMB40 million in 2023FY, driven by its unique taste and healthy concept, particularly popular among white-collar professionals and Generation Z consumers[67] - Revenue of the dairy products and beverages segment grew by 7.4% year-on-year to RMB11,955.6 million in 2023FY, with "O-Bubble Fruit Milk" achieving double-digit revenue growth[68] - Total revenue for the Group in 2023FY increased by 2.9% year-on-year to RMB23,586.3 million, with dairy products and beverages contributing 51% and rice crackers and snack foods contributing 49%[69] - The "56 Ethnic Group Can" series of Hot-Kid Milk returned to the market, driving a double-digit year-on-year growth in sales volume of canned milk in 2023FY[72] - Revenue of the snack foods segment declined by 5.5% year-on-year to RMB5,501.8 million in 2023FY, mainly due to a decline in the popsicles sub-category, though the candies sub-category reached a record high[72] - The cost of sales for the Group in 2023FY decreased by 2.0% year-on-year to RMB12,595.4 million, driven by a double-digit decline in the unit cost of palm oil, paper, and tinplate, offsetting increases in sugar and gelatin costs[73] - Gross profit margin increased by 2.7 percentage points to 46.6% in 2023FY, driven by lower unit costs of key raw materials and improved product pricing management[75][78] - Gross profit rose by 9.1% year-on-year to RMB10,990.9 million due to increased revenue and higher gross profit margin[75][78] - Rice crackers segment gross profit margin increased by 3.4 percentage points to 46.0% in 2023FY, mainly due to a double-digit decrease in palm oil unit cost[76] - Dairy products and beverages segment gross profit margin rose by 3.7 percentage points to 48.5% in 2023FY, driven by lower unit costs of packaging materials and milk powder[76] - Snack foods segment gross profit margin increased by 0.6 percentage points to 44.0% in 2023FY, supported by higher sales of high-margin products and lower unit costs of certain materials[80] - Distribution costs increased slightly by 0.1% to RMB3,021.2 million in 2023FY, while distribution costs as a percentage of revenue decreased by 0.4 percentage points to 12.8%[80] - Administrative expenses rose by 6.8% to RMB3,043.1 million in 2023FY, with the administrative expenses to revenue ratio increasing by 0.5 percentage points to 12.9%[80] - Operating profit increased by 15.7% year-on-year to RMB5,609.8 million in 2023FY, with the operating profit margin rising by 2.7 percentage points to 23.8%[80] - Finance costs increased by RMB59.86 million to RMB281.8 million in 2023FY, mainly due to higher interest rates on USD-denominated borrowings in the first half of the year[81] - Income tax expense amounted to RMB1,422.3 million in 2023FY, with the income tax rate decreasing by 3.3 percentage points to 26.3% compared to 2022FY[82] - Financing costs increased by RMB 59.86 million to RMB 281.8 million in FY2023 due to rising USD interest rates, but decreased significantly in H2 after replacing high-interest USD loans with lower-interest RMB loans[83] - The company's net cash increased by RMB 2.3379 billion to RMB 10.6552 billion as of March 31, 2024, compared to RMB 8.3173 billion as of March 31, 2023[85] - Bank deposits (including long-term deposits) increased by RMB 2.3467 billion to RMB 16.0063 billion as of March 31, 2024, with RMB accounting for approximately 90% (RMB 14.3614 billion)[85] - Total borrowings increased slightly by RMB 8.8 million to RMB 5.3511 billion as of March 31, 2024, with short-term borrowings decreasing by RMB 392.7 million and long-term borrowings increasing by RMB 401.5 million[86] - The company's net gearing ratio improved to -0.65 times as of March 31, 2024, compared to -0.57 times as of March 31, 2023[87] - Operating activities generated a net cash inflow of RMB 5.1514 billion in FY2023, while financing activities resulted in a net cash outflow of RMB 2.4361 billion, mainly due to dividend payments of RMB 1.7911 billion[88] - Capital expenditure decreased to RMB 405.7 million in FY2023 from RMB 531.3 million in FY2022, with investments focused on expanding production plants and equipment in Vietnam and upgrading domestic facilities[89] - The company invested RMB 139.2 million, RMB 93.29 million, and RMB 86.79 million respectively in expanding production facilities for rice crackers, dairy products and beverages, and snack foods[89] - Inventory turnover days decreased by 9 days to 81 days in 2024FY compared to 2022FY, driven by improved supply chain and working capital efficiencies[96] - Inventory as of 31 March 2024 amounted to RMB2,415.1 million, a decrease of RMB727.0 million from RMB3,142.1 million in 2023[96] - Trade receivables turnover days decreased to 13 days in 2024FY from 15 days in 2023FY[96] - Trade payables turnover days remained stable at 29 days for both 2024FY and 2023FY[99] - Average number of employees decreased by 1,342 to 39,887 in 2023FY, with total remuneration expenses decreasing by RMB41.65 million (0.9%) to RMB4,522.4 million[101] - The company recommended a final dividend of US3.30 cents per share for 2023FY, totaling approximately US$390 million, representing 70% of the profit attributable to equity holders[103] Corporate Governance and Board Structure - The company's executive directors include Mr. Tsai Eng-Meng (Chairman and CEO), Mr. Tsai Shao-Chung, and Mr. Tsai Wang-Chia (COO)[4] - The company's independent non-executive directors include Dr. Pei Kerwei, Mr. Hsieh Tien-Jen, and Mr. Lee Kwok Ming[4] - The company's audit and risk management committee is chaired by Mr. Lee Kwok Ming, with members including Dr. Pei Kerwei and Mr. Hsieh Tien-Jen[4] - The company's remuneration committee is chaired by Mr. Hsieh Tien-Jen, with members including Dr. Pei Kerwei and Mr. Tsai Shao-Chung[4] - The company's nomination committee is chaired by Dr. Pei Kerwei, with members including Mr. Tsai Shao-Chung and Mr. Hsieh Tien-Jen[5] - The company's ESG committee is chaired by Mr. Tsai Wang-Chia, with members including Mr. Chu Chi-Wen and Dr. Pei Kerwei[9] - The company's auditor is Ernst & Young, and its legal advisor is Sullivan & Cromwell (Hong Kong) LLP[9] - The company's principal banks include Bank of China (Hong Kong) Limited, China Merchants Bank Co., Limited, and Citigroup Inc.[9] - The company has adopted the Model Code for Securities Transactions by Directors, ensuring compliance with the Listing Rules regarding directors' securities transactions[109] - Directors confirmed compliance with the Model Code for securities transactions during the fiscal year ending March 31, 2024[109] - The company adheres to high standards of corporate governance, aligning with the principles of the Corporate Governance Code, with a minor deviation explained in the corporate governance report[110] - The Board is responsible for establishing the Group's purpose, values, and strategic directions, overseeing financial performance, and approving major financial arrangements and investment projects[111] - The Board ensures effective risk management and internal control systems, and oversees ESG matters and risks[111] - The management team, led by executive Directors, is responsible for the day-to-day management and implementation of Board-approved strategies[112] - The Board has delegated specific responsibilities to various committees, including the Audit and Risk Management Committee, Remuneration Committee, Nomination Committee, and Strategy Committee[112] - The Board consists of 14 Directors as of 31 March 2024, including 7 executive Directors, 2 non-executive Directors, and 5 independent non-executive Directors[114] - The ESG Committee was established in August 2020 to assist the Board in promoting and managing ESG-related matters, including strategies, policies, initiatives, performance, and reporting[114] - The Board is responsible for corporate governance duties, including developing and reviewing corporate governance policies, monitoring compliance with legal and regulatory requirements, and reviewing the code of conduct for employees and Directors[114] - The Company has a Director Nomination Policy in place, which outlines the process and criteria for evaluating, selecting, and recommending candidates for Board nomination and appointment[118] - All Directors are subject to retirement by rotation at least once every three years, with one-third of Directors retiring and being eligible for re-election at each annual general meeting[118] - The Company has entered into formal letters of appointment with all Directors, setting out their duties and major terms and conditions of their appointments[118] - The company has 5 independent non-executive directors who provide valuable business experience, knowledge, and professionalism to the Board for its efficient and effective functioning[123] - Independent non-executive directors have demonstrated their ability to provide independent views and valuable contributions to the company during their terms[119] - Directors appointed to fill casual vacancies or as additions to the Board hold office only until the next general meeting following their appointment[119] - The company complies with Listing Rules 3.10 and 3.10A regarding the appointment of independent non-executive directors with appropriate qualifications[119] - Independent non-executive directors serving more than 9 years are subject to an independence and suitability assessment by the Nomination Committee before re-election[120] - The Board has established a mechanism to ensure independent views and advice are available for effective corporate governance[123] - Independent non-executive directors are explicitly identified as such in all corporate communications disclosing director names[121] - The company has received written confirmations from independent non-executive directors confirming their independence in accordance with Listing Rule 3.13[119] - The Board considers the expertise, experience, and diversity contributed by independent non-executive directors when recommending their re-election[120] - Directors retiring at the 2024 AGM on 27 August 2024 are eligible for re-election[119] - The Board held 6 meetings during the year ended 31 March 2024, primarily to review and discuss the Group's strategies, monitor financial performance, and approve investment projects[124] - The Board reviewed and approved the financial results for the year ended 31 March 2023 and the six months ended 30 September 2023[125] - The Board recommended a final dividend for shareholders' approval at the 2023 AGM[125] - The Board approved the renewal of the service contract with Mr. Tsai Eng-Meng for a term of three years starting from 26 August 2023[125] - The Board granted clearance for Mr. Tsai Eng-Meng to deal in the Company's securities and appointed designated Directors for related notifications[125] - Independent non-executive Directors actively attended Board meetings and provided independent views on the Company's matters[124] - The Board reviewed ESG-related matters, including core ESG strategies and related targets, during the year[125] - The Board approved the adoption of the revised terms of reference of the Remuneration Committee[125] - The Board ensured the effectiveness of the risk management and internal control systems[124] - The Board received reports from the Board Committees and the ESG Committee during the year[124] - The 2023 AGM was held on 22 August 2023[129] - Mr. Liao Ching-Tsun retired as a non-executive Director and ceased to be the vice chairman of the Board and a member of the Strategy Committee upon the conclusion of the 2023 AGM[129] - The Chairman held a meeting with the independent non-executive Directors without the presence of other Directors in March 2024[129] - Regular Board meetings are scheduled in advance with notices served at least 14 days before the meetings[131] - The Chairman ensures that all key and appropriate issues are discussed by the Board in a timely manner[132] - The Chairman promotes a culture of openness and debate, facilitating effective contributions from Directors[133] - Minutes of Board and Board Committee meetings are recorded in sufficient detail, including any concerns or dissenting views raised by Directors[134] - Draft minutes of each Board meeting are sent to Directors for comments before approval at the following meeting[134] - The Chairman ensures that all Directors receive adequate, complete, and reliable information in a timely manner[132] - The Chairman is responsible for ensuring constructive relations between executive and non-executive Directors[133] - The company organized a trip to Vietnam in June 2023 for

Investment Rating - The report maintains an "Outperform" rating for China Want Want (0151 HK) [3] Core Views - Revenue growth is steady with significant improvement in gross margin driving strong net profit performance [3] - Dairy beverages emerging channels and overseas markets show good performance with notable profitability improvement [3] - Traditional channels are recovering while emerging channels and overseas markets are important growth drivers [5] - The company is expected to maintain a positive trend in FY2024 with further improvement in dairy and beverage gross margins [5] Financial Performance - FY2023 revenue reached 23 586 billion yuan (YoY +2 9%) with net profit attributable to shareholders of 3 990 billion yuan (YoY +18 4%) [1] - Gross margin increased by 2 67pct to 46 60% in FY2023 [3] - Net profit margin rose by 2 21pct with net profit attributable to shareholders growing 18 36% YoY [3] - The company plans to distribute cash dividends of 2 776 billion yuan with a payout ratio of 69 57% [1] Business Segments - Dairy and beverage category revenue grew 7 4% YoY with gross margin improving by 3 7pct to 48 5% [2] - Rice cracker category revenue increased 2 3% YoY with gross margin up 3 4pct to 46 0% [3] - Snack food category revenue declined 5 5% YoY but gross margin improved by 0 6pct to 44 0% [3] Channel Performance - Traditional channels showed recovery with milk category growing high single-digit and beverage category growing double-digit [5] - Modern channels grew low-to-mid single-digit with significant growth in dairy and beverage categories [5] - Emerging channels maintained high single-digit growth becoming an important growth driver [5] - Overseas revenue achieved mid-to-high double-digit growth with significant progress in candy products [5] Future Outlook - FY2024-2026 revenue is projected to be 249 92/259 26/268 37 billion yuan [5] - Net profit attributable to shareholders is expected to be 4 554/4 878/5 210 billion yuan for FY2024-2026 [5] - EPS is forecasted to be 0 39/0 41/0 44 yuan per share for FY2024-2026 [5] - The company is given a PE valuation range of 16-20x (2024E) corresponding to a reasonable value range of 6 93-8 67 HKD per share [5] Financial Ratios - ROE improved from 23 01% in FY2022 to 24 38% in FY2023 and is expected to reach 26 02% by FY2026 [4] - Asset-liability ratio decreased from 40 25% in FY2023 and is projected to further decline to 35 62% by FY2026 [8] - Current ratio improved from 1 56 in FY2023 and is expected to reach 2 06 by FY2026 [8]