WANT WANT CHINA(00151)2022-07-15 08:46Company Overview - Want Want China Holdings Limited is listed on The Stock Exchange of Hong Kong Limited with stock code 0151[4] - The company's executive directors include Mr. Tsai Eng-Meng (Chairman and CEO), Mr. Tsai Shao-Chung, Mr. Tsai Wang-Chia (COO), Mr. Huang Yung-Sung (CMO), and Mr. Chu Chi-Wen (CFO)[4] - The company's principal place of business and headquarters address is at Units 07-08, 7th Floor, FTLife Tower, No. 18 Sheung Yuet Road, Kowloon Bay, Kowloon, Hong Kong[6] - The company's website is www.want-want.com[6] - The company's auditor is Ernst & Young Certified Public Accountants[5] - The company's legal advisor is Sullivan & Cromwell (Hong Kong) LLP[5] - The company's principal banks include Bank of China (Hong Kong) Limited, China Merchants Bank Co., Limited, Citigroup Inc., and CTBC Bank Co., Ltd, Hong Kong Branch[5] - The company's registered office is at Maples Corporate Services Limited, P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands[6] - The company's share registrar and transfer office is Suntera (Cayman) Limited, Suite 3204, Unit 2A, Block 3, Building D, P.O. Box 1586, Gardenia Court, Camana Bay, Grand Cayman, KY1-1100, Cayman Islands[6] - The company's Hong Kong branch share registrar and transfer office is Computershare Hong Kong Investor Services Limited, Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong[6] Business Operations - The company has 422 sales offices, 35 production bases, and 81 factories in the Chinese mainland as of March 31, 2022, and collaborates with over 10,000 distributors[8] - The company's Vietnam production base began construction in 2020 to support overseas market expansion and future development strategies[7] - The company's principal activities include manufacturing, distribution, and sale of rice crackers, dairy products, beverages, snack foods, and other products[8] - The company's operations are primarily located in the Chinese mainland, with exports to North America, East Asia, Southeast Asia, and Europe[8] - The company was listed on the Hong Kong Stock Exchange on March 26, 2008, and previously listed on the Singapore Exchange Securities Trading Limited in 1996 before delisting in 2007[7] - The company introduced the "Want Want" brand in the Chinese mainland in 1989 and established its first subsidiary in Hunan province in 1992[7] - The company transitioned from a rice cracker-focused business to a diversified food and beverages company in the years following its establishment in 1962[7] Corporate Culture and Activities - The company held a new corporate theme song contest in 2021 to strengthen team spirit and communication with distributors[12] - The company organizes traditional Chinese festive activities annually to improve team cohesion and employee belonging[15] - The company held the Want Want Family Day to enhance communication with employees and their families, showcasing employee achievements and building a positive corporate culture[16] Financial Performance - Revenue for the year ended March 31, 2022, reached RMB 23,984,891 thousand, a 9.0% increase from the previous year[33] - Profit for the year ended March 31, 2022, was RMB 4,189,114 thousand, a 1.0% increase from the previous year[33] - EBITDA for the year ended March 31, 2022, was RMB 5,734,383 thousand, a 4.3% decrease from the previous year[33] - Basic earnings per share for the year ended March 31, 2022, were RMB 35.16 cents, a 3.9% increase from the previous year[33] - Total assets as of March 31, 2022, were RMB 29,857,981 thousand, a 4.4% decrease from the previous year[34] - Total equity as of March 31, 2022, was RMB 16,708,778 thousand, an 11.6% increase from the previous year[34] - Total liabilities as of March 31, 2022, were RMB 13,149,203 thousand, a 19.2% decrease from the previous year[34] - Dividends for the year ended March 31, 2022, amounted to RMB 4,691,334 thousand, a 174.3% increase from the previous year[33] - Shares buy-back for the year ended March 31, 2022, totaled RMB 819,493 thousand, a 48.8% decrease from the previous year[33] - Return on equity for the year ended March 31, 2022, was calculated based on profit attributable to equity holders of the Company divided by the average of the opening and closing balances of the equity[32] - Revenue for the 2021 fiscal year reached RMB 23,984.9 million, representing a growth of over 100 times compared to the annual revenue before the company's investment in the Chinese mainland[36] Awards and Recognitions - The export product Pea Crisp (Apple Cinnamon Flavour) won the 2021 Monde Selection Gold Quality Award in April 2021[37] - The Hot-Kid Occupational Cans marketing proposal won the 9th TopDigital Innovative Marketing Award – IP Marketing – Gold Award in July 2021[38] - The collaboration between Want Want and NetEase Music "Sounds Delicious" won the Cross-Industry Joint Marketing Gold Award at the 12th Golden Mouse Digital Marketing Awards in April 2021[39] - Want Want Rice Prawn Chips won "The Best Flavour Snack" at the 3rd iSEE Innovation Award in May 2021[41] - Research on key technology of active lactoferrin yogurt won the Second Prize of the Technical Progress Award from the China Dairy Industry Association in September 2021[42] - Want Want Group won the Special Contribution Award of the China Food Health Seven Star Award for the seventh time in September 2021[43] - The research and application of lactoferrin detection technology in fermented milk won the Second Prize of the Science and Technology Award from the China Food Industry Association in December 2021[43] - Want Want ranked third in the list of "Taiwan Top 25 International Brands" in December 2021[44] Revenue and Profit Analysis - Group revenue reached a record high of RMB 23,984.9 million, a 9.0% year-on-year increase[46][47][48][49] - Revenue from key product segments: Rice crackers RMB 5,592.3 million (↑0.2%), Daily products & beverages RMB 12,873.5 million (↑16.9%), Snack foods RMB 5,397.2 million (↑1.6%)[46][47] - Emerging channels contributed approximately 40% of revenue, with new products playing a significant role[46][47] - Profit attributable to equity holders of the Company increased by 1.1% to RMB 4,202.7 million[46][47][48][49] - Gross profit margin decreased by 3.4 percentage points to 44.8% due to rising raw material and packaging costs[48][49] - Operating profit decreased by 4.9% to RMB 5,456.8 million, but remained nearly flat year-on-year excluding one-off gains from the previous year[49] - Total dividends for 2021FY amounted to USD 699 million, including interim, final, and special dividends[46][47] - Overseas markets returned to mid-to-high single-digit year-on-year revenue growth as supply chain pressures eased[49] - Traditional channels contributed approximately 80% of revenue, while modern and emerging channels showed high-single and double-digit growth respectively[46][47] - The Group will continue to monitor external environmental changes and manage cost risks to maintain healthy development[49] - Revenue from traditional channels achieved a high single-digit year-on-year growth in 2021FY[51] - Revenue from modern channels achieved a near high single-digit growth in 2021FY, driven by new products and convenience store channels[51] - Emerging channels contributed close to a double-digit percent of the Group's overall revenue in 2021FY, with 40% of revenue from new products launched in the past three years[52] - Revenue from vending machines doubled in 2021FY compared to the previous financial year[54] - Overseas sales in 2021FY saw a mid-to-high single-digit growth rate in the second half, with double-digit growth excluding exchange rate effects[55] - The factory in Vietnam is expected to commence production in mid-2022, with new offices in Southeast Asia already operational[55] Product and Brand Development - The Group launched several new brands, including "Baby Mum-Mum," "Mr. Bond," "Fix x Body," "Queen Alice," "Mr. Hot," "Got Rice," and "Prime of Love"[59][60] - The Group's B2B model includes online/offline cooperation, self-developed e-shopping mall, maternity channels, OEM business channels, and special channels[53] - The Group's B2C model includes self-operated online flagship stores, vending machines, and theme stores[54] - The Group aims to develop suitable products for local consumers' preferences in overseas markets[55] - Total revenue for the 2021FY grew by 9.0% year-on-year, reaching RMB23,984.9 million[63] - Revenue from the dairy products and beverages segment increased by 16.9% year-on-year, with double-digit growth in both halves of the year[63] - Revenue from the rice crackers segment remained flat year-on-year, with a low-to-mid single-digit growth in the second half of the year[63] - Revenue from the snack foods segment grew by 1.6% year-on-year, with mid-to-high single-digit growth in the second half of the year[63] - Revenue from "Hot-Kid Milk" accounted for over 90% of the dairy products and beverages segment, recording a year-on-year growth rate of 18.4%[67] - New products introduced in the past three years accounted for nearly a double-digit percentage of the Group's total revenue in the 2021FY[61] - Revenue from the candies sub-category increased by 5.1% year-on-year, with significant growth in emerging channels[69] - Overseas sales of rice crackers, which accounted for approximately 20% of the segment revenue, resumed a mid-single digit growth in the second half of the year[65] - New products under the "Got Rice" brand, such as "Want Want Donuts" and "Crispy Rice Chips," were launched to meet health demands[66] - The Group launched new dairy products like "Hot-Kid Chocolate Milk" and "Nut Milk," which together contributed sales of over RMB100 million in the 2021FY[68] - Revenue from the popsicles sub-category grew by 2.7% year-on-year in the 2021FY, with "Dongchi" exceeding annual sales of RMB200 million[72] - The social media campaign "Have a craving for Dongchi" generated over 220 million views, contributing to the brand's success[72] Cost and Profit Margins - The cost of sales for the Group in the 2021FY increased by 16.2% year-on-year to RMB13,237.5 million, driven by double-digit increases in key raw material costs[72] - Gross profit margin for the Group decreased by 3.4 percentage points to 44.8% in the 2021FY, with gross profit increasing by 1.3% year-on-year to RMB10,747.4 million[73] - The rice crackers segment's gross profit margin decreased by 4.7 percentage points to 41.4% in the 2021FY, primarily due to rising palm oil costs[73] - The dairy products and beverages segment's gross profit margin decreased by 2.9 percentage points to 46.7% in the 2021FY, mainly due to increased costs of tinplate and whole milk powder[73] - The snack foods segment's gross profit margin decreased by 3.5 percentage points to 44.2% in the 2021FY, driven by higher costs of paper and plastic pellets[73] - The Group launched several new products in the snack foods segment, including "fruit-flavored aerated gummies," "Hot-Kid Super QQ," "YA-MI Sandwich Bun," and "Jelly Jelly," which features low-sugar, low-calorie, and collagen peptides[72] - The Group is optimizing production processes and diversifying channels to maintain healthy profitability in the dairy products and beverages segment[73] - The Group is focusing on product upgrades and introducing high-margin new products to sustain profitability in the snack foods segment[73] Expenses and Profitability - Distribution costs increased by RMB367.6 million (13.3% YoY) to RMB3,133.2 million, accounting for 13.1% of revenue, up 0.5 percentage points YoY[74] - Administrative expenses rose by RMB21.30 million (0.8% YoY) to RMB2,734.7 million, but decreased as a percentage of revenue by 0.9 percentage points to 11.4%[74] - Operating profit decreased by 4.9% YoY to RMB5,456.8 million, with an operating profit margin of 22.8%, due to a 3.4 percentage point decline in gross profit margin[74] - Income tax expense for 2021FY was RMB1,545.3 million, with an income tax rate of 26.9%, down 3.9 percentage points YoY[74] - Profit attributable to equity holders increased by 1.1% YoY to RMB4,202.7 million, but the margin decreased by 1.4 percentage points to 17.5%[74] Cash Flow and Financial Position - Net cash increased by RMB1,002.6 million to RMB10,100.6 million as of 31 March 2022, driven by RMB3,910.5 million net cash generated from operating activities[76] - Cash and bank deposits (including long-term deposits) decreased by RMB1,928.3 million to RMB17,002.8 million as of 31 March 2022, with RMB accounting for 85.1%[76] - Total borrowings decreased by RMB2,930.9 million to RMB6,902.2 million as of 31 March 2022, mainly due to repayment of USD-denominated borrowings[76] - Short-term borrowings increased by RMB15.89 million to RMB3,355.9 million, while long-term borrowings decreased by RMB2,946.8 million to RMB3,546.4 million[76] - The Group repaid USD500 million bonds in full upon maturity in April 2022, with a balance of USD499.9 million as of 31 March 2022[76] - Net gearing ratio as of 31 March 2022 was -0.61 times, unchanged from 31 March 2021[78] - Net cash inflow from operating activities was RMB 3,910.5 million, driven by profit before income tax of RMB 5,734.4 million[78] - Cash outflow for financing activities was RMB 5,342.4 million, including RMB 2,642.6 million for repayment of USD-denominated borrowings[78] - Cash and cash equivalents as of 31 March 2022 amounted to RMB 11,055.8 million, with total liquidity of RMB 17,002.8 million including long-term deposits[78] - Capital expenditure for FY2021 was RMB 460.5 million, with significant investments in production plant expansions in Vietnam[78] Inventory and Turnover - Inventory as of 31 March 2022 increased to RMB 3,226.2 million, up by RMB 697.4 million compared to 2021, while inventory turnover days decreased by 6 days[82][83] - Trade receivables turnover days remained stable at 15 days for both 2021 and 2022[89] - Trade payables turnover days improved to 28 days in 2022 from 33 days in 2021[89] Employee and Compensation - Average number of employees in FY2021 was 41,265, with total employee compensation of RMB 4,403.4 million[90] - The average number of employees in 2021FY was 41,265, an increase of 72 employees compared to the previous year[91] - Total remuneration expenses for 2021FY amounted to RMB4,403.4 million[91] Foreign Exchange and Dividends - The Group's foreign exchange risks mainly arise from overseas procurement of raw materials and equipment, overseas dividend payments, and certain recognized assets or liabilities[92] - The Group did not hedge against its foreign exchange risks during the 2021FY[93] - The Board recommended a final dividend of US2.10 cents per share for the 2021FY, amounting to approximately US350 million (RMB2,369 million)[95] - Total dividends for the 2021FY would be US5.87 cents per share, amounting to approximately US826 million (RMB5,510 million) to its shareholders in 2021FY, including dividends and share repurchases, representing a 67% increase compared to the 2020FY[95] - The Group's total return to shareholders in 2021FY represented approximately 131% of the profit attributable to equity holders[95] - The Group's functional currency is USD, while the presentation currency is RMB, with over 90% of operating activities conducted in the Chinese mainland[92] Board and Governance - The Board consists of 15 Directors, including 7 executive Directors, 3 non-executive Directors, and 5 independent non-executive Directors as of 31 March 2022[102] - The Board is responsible for overseeing the Group's operating and financial performance, approving annual budgets, financial results, major investments, and material contracts[101] - The Board has delegated specific responsibilities to committees including Audit and Risk Management, Remuneration, Nomination, and Strategy Committees[101] - The ESG Committee was established in August 2020 to assist the Board in managing environmental, social, and governance matters[101] - The Board