Core Insights - Henan province, known for its large population, is emerging as a significant player in the new consumption landscape, particularly in the prepared food sector [1][2] - The province is home to over 4,000 companies related to prepared food, ranking first in the country for the number of such enterprises [2] - Henan's agricultural advantages contribute to its dominance in the prepared food industry, producing a substantial portion of China's staple foods [3][4] Industry Overview - Henan produces 25% of China's steamed buns, 33% of instant noodles, 50% of ham sausages, and 60% of dumplings, showcasing its agricultural strength [3] - The province is recognized as a major agricultural hub, with its grain output second only to Heilongjiang in 2024, and it consistently ranks first in wheat production [3] - The local market provides high-quality, low-cost raw materials, supported by a well-established food production and management system [3] Market Dynamics - The population density in Henan provides a robust market and labor force, while its strategic location enhances logistics and cold chain transportation capabilities [4] - Companies like Shuanghui have successfully entered the prepared food market, launching various products under their brands [3] - The combination of agricultural output and industrial development positions Henan as a key player in the prepared food sector, often referred to as "China's kitchen" [4]

Investment Rating - The report maintains a "Recommended" rating for the food and beverage industry [1]. Core Insights - The "14th Five-Year Plan" has shifted focus towards enhancing domestic demand and domestic circulation, emphasizing the need for a balance between supply and demand [3]. - New consumption trends are expected to continue driving excess returns, particularly in new channels and product categories [3]. - The report highlights the potential benefits for dairy products and the restaurant supply chain due to policy stimuli aimed at boosting consumption [3]. - The report anticipates a gradual recovery in the dairy market, with milk prices expected to rise moderately due to improved supply-demand dynamics [3]. - Investment suggestions include focusing on companies with strong performance in new consumption directions, such as Dongpeng Beverage and Angel Yeast, as well as cyclical stocks with low valuations [3]. Summary by Sections Industry Overview - The report discusses the upgraded focus on domestic demand and the relationship between supply and demand in the context of the "14th Five-Year Plan" [3]. - It emphasizes the importance of new consumption trends and channels, such as instant retail and health-oriented products [3]. Key Areas of Focus - The dairy sector is highlighted as a key area benefiting from potential birth rate policies and consumer demand for dairy products [3]. - The restaurant supply chain is expected to see a boost from government consumption vouchers and ongoing support measures [3]. Investment Recommendations - The report suggests monitoring quarterly performance reports, particularly for companies aligned with new consumption trends [3]. - It identifies specific stocks to watch, including those with solid fundamentals and those in cyclical sectors that may benefit from improving market conditions [3].

Investment Rating - The investment rating for the food and beverage industry is "Positive" (maintained) [1] Core Insights - The quarterly performance continues to show differentiation, with a recommendation to strengthen positions during the bottom cycle. The food and beverage index declined by 0.9% from October 20 to October 24, ranking 27th among primary sub-industries, underperforming the CSI 300 by approximately 4.2 percentage points. Sub-industries such as processed foods (+1.0%), meat products (+0.6%), and other alcoholic beverages (+0.5%) performed relatively well. The traditional consumption sector continues to face significant performance pressure, particularly in the liquor segment, where business demand remains under pressure. Although there has been a slight improvement in terminal consumption demand, the overall market demand remains weak. It is anticipated that the liquor sector will experience a further slowdown in performance growth for the third quarter [3][12][14]. Summary by Sections Market Performance - The food and beverage index experienced a decline of 0.9%, ranking 27th out of 28 sectors, and underperformed the CSI 300 by about 4.2 percentage points. Leading sub-industries included processed foods (+1.0%), meat products (+0.6%), and other alcoholic beverages (+0.5) [12][14]. Upstream Data - Some upstream raw material prices have decreased. For instance, the price of fresh milk was 3.0 yuan per kilogram, down 2.9% year-on-year. The price of pork was 17.7 yuan per kilogram, down 28.4% year-on-year [21][26]. Policy Insights - The 20th Central Committee's Fourth Plenary Session emphasized expanding domestic demand and building a strong domestic market, which is expected to inject clear policy dividends into the food and beverage industry. The core driver for long-term industry growth is the boost in domestic demand, which will directly stimulate market consumption and upgrade potential [4][13]. Recommended Stocks - The report recommends focusing on two types of stocks: first, leading companies with low valuations and national layout capabilities; second, growth companies that align with new consumption trends. Specific recommendations include Guizhou Moutai, Shanxi Fenjiu, Ximai Foods, Weilong, and Bairun [5][56].

Summary of Weilong Delicious (9985 HK) Equity Research Report Company Overview - **Company**: Weilong Delicious - **Ticker**: 9985 HK - **Industry**: Food Products - **Market Cap**: HKD 29,247 million (USD 3,762 million) as of 14 October 2025 Key Takeaways from the Conference Call 1. Business Performance - **3Q25 Business Progress**: The company reported that its business progress in 3Q25 was in line with expectations, with stable trends in seasoned flour products and growth in traditional konjac flavor products. Monthly sales of sesame paste flavor products increased from RMB 40-50 million in August to RMB 70-80 million in September, indicating strong demand [3][4][14]. 2. Financial Outlook - **Gross Margin**: The gross margin narrowed by 2.6 percentage points year-over-year to 47.2% in 1H25 due to high prices of konjak mannan. The company expects the gross margin to remain stable in 2H25, with a target range of 46-48% [4][22]. - **Operating Expenses**: The operating expenses ratio may increase in 2H25 due to higher marketing expenses for the konjac market [4][22]. - **Net Margin Guidance**: The company maintains a steady net margin guidance of 18-20% [4][22]. 3. Strategic Initiatives - **Omni-Channel Strategy**: - Despite challenges in same-store growth for discount snack food operators, Weilong achieved steady growth in this channel. - The company is launching more products through innovative flavors and packaging in collaboration with membership-only retailers. - Plans for overseas expansion include distributing vegetable products in Thailand through partnerships with local retailers [5][22]. 4. Investment Rating and Target Price - **Rating**: Maintain Buy rating - **Target Price**: HKD 16.50, implying approximately 37% upside from the current share price of HKD 12.03 [6][22]. 5. Potential Catalysts and Risks - **Catalysts**: Successful new product expansion, capacity expansion, positive overseas development, and easing cost pressures [7][22]. - **Risks**: Food safety concerns, intensifying competition, rising raw material prices, and potential governance issues [7][22]. Financial Projections - **Revenue Growth**: Projected revenue growth of 28.6% in 2024, tapering to 15.5% by 2027 [16][15]. - **Earnings Per Share (EPS)**: Expected EPS growth from CNY 0.44 in 2024 to CNY 0.77 in 2027 [10][15]. Conclusion Weilong Delicious is positioned for stable growth with a focus on expanding its product offerings and market presence, particularly in the konjac category and overseas markets. The company maintains a positive outlook despite some margin pressures and operational challenges. The investment rating remains bullish with a significant upside potential based on current valuations.

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Viewpoints - The report suggests that the performance and valuation of the industry are approaching a double bottom, recommending to strengthen positions during the bottom cycle [3][11] - The food and beverage index increased by 0.9% from October 13 to October 17, outperforming the CSI 300 by approximately 3.1 percentage points [11][12] - Short-term demand for liquor is nearing a bottom, with business demand under pressure and slight improvements in terminal consumption [3][11] - The report emphasizes the need to observe macroeconomic trends for long-term industry outlook, with expectations of a more gradual recovery slope [3][11] Summary by Sections 1. Weekly Insights - The report indicates a double bottom in performance and valuation, suggesting to strengthen positions during the bottom cycle [3][11] - The food and beverage index outperformed the market, ranking third among primary sub-industries [11][12] 2. Market Performance - The food and beverage index rose by 0.9%, with other liquor categories, health products, and liquor showing relative strength [12][13] - Notable individual stock performances included Kuaijishan, Miaokelando, and Guifaxiang leading in gains [12][13] 3. Upstream Data - Some upstream raw material prices have decreased, with full-fat milk auction prices showing a year-on-year increase of 4.0% [17] - Domestic fresh milk prices decreased by 2.9% year-on-year [17] 4. Liquor Industry News - Moutai 1935 saw significant year-on-year sales growth in September, indicating market resilience [40] - The report highlights the importance of observing the pricing changes of Moutai as a key internal factor [3][11] 5. Recommended Portfolio - Recommended stocks include Guizhou Moutai, Shanxi Fenjiu, Ximai Food, Weilong Delicious, and Bairun Shares, with each having specific growth potential and market strategies [4]

Core Viewpoint - The Hong Kong stock market has seen a decline in new consumption concept stocks, with several companies experiencing significant drops in their stock prices [1][2]. Group 1: Stock Performance - Wei Long Mei Wei (卫龙美味) fell by 6.72%, with a latest price of 12.220 and a market capitalization of 29.709 billion [2]. - Bluestone (布鲁可) decreased by 5.91%, priced at 97.950, with a total market value of 24.37 billion [2]. - Naixue's Tea (奈雪的茶) dropped by 5.65%, trading at 1.170, and has a market cap of 1.995 billion [2]. - Hu Shang A Yi (沪上阿姨) saw a decline of 5.57%, with a price of 111.900 and a market capitalization of 11.772 billion [2]. - Miniso (名创优品) decreased by 5.51%, priced at 41.880, with a total market value of 51.164 billion [2]. - Pop Mart (泡泡玛特) fell by 5.14%, trading at 273.400, with a market cap of 367.161 billion [2]. - XPeng Motors (小鹏汽车-W) decreased by 4.77%, with a latest price of 78.850 and a market capitalization of 150.328 billion [2]. - Mixue Group (密雪集团) dropped by 4.68%, priced at 423.400, with a market cap of 160.731 billion [2]. - Gu Ming (古茗) saw a decline of 4.66%, trading at 24.120, with a total market value of 57.362 billion [2]. - Shangmei Co., Ltd. (上美股份) decreased by 4.74%, with a price of 95.550 and a market capitalization of 38.039 billion [2].

Core Viewpoint - Goldman Sachs initiates coverage of Weilong Delicious (09985) with a "Buy" rating, citing a favorable risk-reward profile after a 30% price correction since April [1] Group 1: Company Overview - Weilong Delicious is a well-known Chinese snack company with a strong national presence in the seasoning noodle and konjac product sectors [1] - The company holds a dominant market position in the konjac food segment, expected to contribute over 60% of sales by 2025, with a current market share of 42% [1] Group 2: Financial Projections - Goldman Sachs forecasts a compound annual growth rate (CAGR) of 13% for Weilong's earnings from 2025 to 2027, compared to 3% for its closest global peer, Calbee [1] - The projected sales and net profit CAGR for Weilong from 2025 to 2027 is estimated at 11% and 13%, respectively [2] Group 3: Market Dynamics - The report acknowledges increasing competition in the konjac product market but highlights several factors supporting Weilong's growth: 1. Smaller competitors are more vulnerable to cost increases and pricing pressures [2] 2. Weilong's first-mover advantage allows it to adapt to competitive pressures due to its national coverage and resources [2] 3. The company's brand image and market insights provide opportunities for consumer penetration, channel expansion, and product variety [2] Group 4: Profitability Outlook - Efforts to optimize automation, increase capacity utilization, and leverage operational efficiencies are expected to enhance Weilong's net profit margin from 18.9% in 2025 to 19.5% in 2027 [2]

Core Viewpoint - Goldman Sachs initiates coverage of Wei Long Delicious (09985) with a buy rating, citing a favorable risk-reward profile after a 30% price correction since April [1] Group 1: Company Overview - Wei Long Delicious is a well-known Chinese snack company with a strong national presence in the seasoning noodle and konjac product sectors [1] - The company holds a dominant market position in the konjac food segment, expected to contribute over 60% of sales by 2025, with a current market share of 42% [1] Group 2: Financial Projections - Goldman Sachs forecasts a compound annual growth rate (CAGR) of 13% for the company's earnings from 2025 to 2027, compared to 3% for its closest global peer, Calbee [1] - The expected CAGR for sales and net profit is projected at 11% and 13%, respectively, for the same period [2] Group 3: Market Dynamics - The report acknowledges increasing competition in the konjac product market but highlights several factors supporting Wei Long's growth: 1. Smaller competitors are more vulnerable to cost increases and pricing pressures due to scale disadvantages [2] 2. Wei Long's first-mover advantage allows it to adapt to competitive pressures through national coverage and resources [2] 3. The company's brand image and market insights provide opportunities for consumer penetration, channel expansion, and product variety [2] Group 4: Profitability Outlook - The company is expected to improve its net profit margin from 18.9% in 2025 to 19.5% in 2027, driven by automation, increased capacity utilization, operational leverage, and favorable raw material costs [2]

Core Viewpoint - The report from China Merchants Securities indicates a decline in participation and investor interest in the 2025 Autumn Sugar Exhibition, reflecting a decrease in industry enthusiasm, while the liquor sector's performance during the holiday season aligns with expectations [1][2]. Liquor Industry - The number of participating liquor companies at the Autumn Sugar Exhibition has decreased, with a shift in investment focus towards the consumer end, leading to a cautious attitude among liquor distributors [2]. - The performance of high-end liquor brands remains resilient, with Moutai's price stabilizing around 1800 yuan, which has positively impacted sales during the holiday season [3]. - The overall sales during the holiday season for liquor have declined, but leading brands have shown better performance compared to the industry average, indicating a trend towards increased industry concentration [3]. Food Industry - The beverage sector has shown significant inventory reduction during the holiday period, with leading brands like Nongfu Spring expected to achieve double-digit growth [4]. - The snack sector continues to expand, particularly in discount store formats, although same-store sales have seen a slight decline [4]. - The dairy sector remains under pressure, particularly for ambient liquid milk, with a need for structural improvements [4]. Investment Recommendations - The report suggests focusing on leading liquor brands such as Kweichow Moutai, Shanxi Fenjiu, Luzhou Laojiao, and Wuliangye, as well as emerging brands like Zhenjiu Lidu and Yingjia Gongjiu, which are expected to contribute positively [5][6]. - In the food sector, recommendations include leading snack brands like Ximai Foods and beverage leaders like Nongfu Spring and Dongpeng Beverage, while also highlighting opportunities in the dairy sector with companies like Yili [6].

Core Viewpoint - Wei Long Delicious (09985) has seen a stock price increase of over 6%, currently trading at HKD 13.55 with a transaction volume of HKD 44.41 million, indicating strong market interest and positive sentiment towards the company [1][1]. Financial Performance - In September, Wei Long's overall growth rate exceeded 20%, with significant growth in konjac products and stabilization in spicy snack products [1][1]. - The cost pressure for konjac powder has peaked, and a downward cost cycle is expected from 2025 to 2027 [1][1]. Product Development - Wei Long's konjac products are in a rapid growth phase, with classic flavors such as spicy, numbing, and sour continuing to penetrate the market, and new sesame flavor sales are quickly gaining traction [1][1]. Channel Strategy - The company has achieved comprehensive channel coverage, developing a "supplementary sales + assisted sales" model that supports the growth of distributors [1][1]. - Wei Long is positioned at the top level in the snack industry regarding network coverage and terminal control, effectively empowering new product promotions [1][1].