Investment Rating - The report initiates coverage with a "Sell" rating for the company [1]. Core Views - The company is recognized as a leading player in the snack food sector, particularly in the spicy strip market, with a market share of 28% in 2023, significantly ahead of its competitors [9][15]. - The report highlights the successful price increases and channel adjustments that have contributed to revenue growth, particularly in the vegetable product category, which is expected to see a 59% increase in 2024 [9][39]. - The report emphasizes the potential for growth in the Chinese snack food market, particularly for spicy snacks, which are gaining popularity among consumers [77]. Summary by Sections 1. Snack Food Sector Leader - The company has established itself as a leader in the spicy strip market, with a strong brand identity and effective marketing strategies targeting younger consumers [9][23]. - The company has successfully transitioned from traditional distribution channels to modern ones, enhancing its market reach and stability [9][29]. 2. Growth of Vegetable Products - The vegetable product category, led by konjac products, has become the company's largest segment, with a compound annual growth rate (CAGR) of 49.8% from 2018 to 2024 [39]. - The company has optimized its product structure, leading to a decline in the share of other products while focusing on high-growth categories [39]. 3. Market Potential for Spicy Snacks - The report notes that the spicy snack market is still in its growth phase, with significant opportunities for leading companies to capitalize on consumer trends [77]. - The company is well-positioned to increase its market share in the spicy strip segment, with potential revenue growth projected to reach 39 billion yuan if sales recover to 2021 levels [88]. 4. Financial Projections and Valuation - The company is expected to achieve revenues of 78.6 billion yuan in 2025, with net profits projected at 13.8 billion yuan, corresponding to a price-to-earnings (P/E) ratio of 26 [9][1]. - The report suggests that the company's valuation could rise to 25-30 times earnings based on its growth potential and market positioning [9].

Investment Rating - The report initiates coverage with a "Sell" rating for the company [1] Core Views - The company is recognized as a leading player in the snack food sector, particularly in the spicy strip market, with a market share of 28% in 2023, significantly ahead of its competitors [9][15] - The report highlights the successful price transmission and channel adjustments that have contributed to revenue growth, particularly in the vegetable products segment, which is expected to see a 59% increase in 2024 [9][39] - The report emphasizes the potential for growth in the Chinese snack food market, particularly for spicy snacks, which are gaining popularity among consumers [77][86] Summary by Sections 1. Snack Food Sector Leader - The company has established itself as a leader in the spicy strip market, with a strong brand identity and effective channel strategies [9][15] - The brand has successfully engaged younger consumers, with 95% of its customer base under 35 years old, and has created a strong association of "spicy strips = Wei Long" in consumer minds [23][29] - The company has undergone significant channel reforms since 2015, transitioning from traditional distribution to modern channels, resulting in a stable and effective distribution network [29][33] 2. Vegetable Products as a Key Growth Driver - The company's vegetable products, particularly those based on konjac, have become the largest product category, with a compound annual growth rate (CAGR) of 49.8% from 2018 to 2024 [39] - The spicy strip segment remains stable, contributing 42.6% of revenue in 2024, while vegetable products are expected to account for 53.8% of revenue [39][51] - The company has successfully implemented price increases to enhance gross margins, with vegetable products achieving a gross margin of around 50% [51][55] 3. Growth Potential in the Chinese Snack Market - The report identifies a growing trend in the Chinese snack market, particularly for spicy snacks, which are expected to continue gaining market share [77][86] - The spicy snack market is projected to reach a size of approximately 200 billion yuan, with the company positioned to benefit from this growth due to its strong brand and distribution capabilities [86][88] - The konjac snack market is also expanding, with a projected market size of over 120 billion yuan in 2024, indicating significant growth potential for the company's product offerings [91][92]