Company Overview - Wanchen Group has been actively expanding its snack retail business since 2022, acquiring and integrating five major brands to establish a second growth curve [3] - The company has a concentrated ownership structure, with Wang Zenning as the controlling shareholder, holding approximately 34.6% of the shares [3] Industry Insights - The snack retail market in China has shown significant growth, with the market size increasing from 21.1 billion yuan in 2019 to 80.9 billion yuan in 2023, representing a CAGR of about 40% [2] - The number of snack retail stores is expected to reach 45,000 by 2025, indicating substantial expansion potential in the industry [2] Financial Performance - Wanchen Group's snack retail revenue is projected to reach 31.79 billion yuan in 2024, with a net profit of 860 million yuan, reflecting a year-on-year growth of 128% and 251% respectively [4] - The company has over 15,000 stores, with rapid growth in store numbers being a key driver of revenue increase [4] Profitability and Cost Management - The scale effect from increasing revenue and store density is expected to enhance profit margins, with continuous cost reduction efforts [5] - Wanchen Group is actively developing its own brands, which is anticipated to further improve profitability [5] Strategic Initiatives - The company is focusing on brand building and has begun to introduce IP-derived products to enhance consumer engagement [6] - Wanchen Group is transitioning towards a discount retail model, launching "Lai You Pin" and "Hao Xiang Lai" stores, expanding product categories beyond snacks to include daily necessities and fresh produce [6] Investment Outlook - The company is expected to achieve revenues of 54.2 billion yuan, 63.4 billion yuan, and 71.6 billion yuan from 2025 to 2027, with net profits of 770 million yuan, 1.08 billion yuan, and 1.3 billion yuan respectively [6] - A target price of 184.01 yuan has been set, indicating approximately 20% upside potential from the current valuation [6]

Investment Rating - The report assigns a "Buy" rating for the company with a target price of 184.01 CNY, indicating approximately 20% upside potential from the current price of 150.11 CNY [7]. Core Insights - The company is positioned as a leading player in the snack retail sector, with significant growth potential in the discount store format, which is becoming a new trend in the market [1][5]. - The snack retail market in China is projected to grow from 211 billion CNY in 2019 to over 1000 billion CNY by 2024, with a CAGR of approximately 40% from 2019 to 2023 and an expected CAGR of 18% from 2023 to 2027 [1][35]. - The company has rapidly expanded its store count to over 15,000, establishing a strong competitive position alongside its main rival [1][39]. Summary by Sections 1. Rapid Growth in Snack Retail Business - The company, founded in 2011, initially focused on edible fungi and has since diversified into the snack retail sector, achieving significant revenue growth [2][15]. - In 2024, the snack retail business is expected to generate revenue of 31.79 billion CNY, reflecting a year-on-year growth of 262.94% [15][26]. - The company has integrated five major snack brands and is actively developing its private label products to enhance profitability [4][5]. 2. Market Trends and Opportunities - The snack retail channel is still in a growth phase, with significant market expansion opportunities remaining [35][36]. - The company is transitioning towards a full-category discount store model, launching "Lai You Pin" and "Hao Xiang Lai" stores to diversify its product offerings beyond snacks [5][49]. - The competitive landscape is evolving, with major players like Lele and Aoleqi also entering the discount store space, indicating a shift in consumer preferences towards value-oriented shopping [44][45]. 3. Financial Performance and Projections - The company is projected to achieve revenues of 54.15 billion CNY in 2025, with a net profit of 773.12 million CNY, reflecting a strong growth trajectory [6][4]. - The EBITDA is expected to reach 2.74 billion CNY in 2025, with a significant improvement in profit margins due to economies of scale and cost management [6][4]. - The report highlights a decrease in expense ratios, with the net profit margin improving from -1.57% in 2023 to 3.59% in Q1 2025 [29][28].