Core Viewpoint - The company Wanchen Biotechnology has rapidly transformed from a mushroom cultivation business to a leading player in the snack industry, achieving over 15,000 stores but facing significant debt challenges as it prepares for a Hong Kong IPO [1][6][22]. Group 1: Company Transformation and Growth - Wanchen Biotechnology entered the snack market in August 2022 and has since acquired regional brands, rebranding them under "Haoxianglai," aiming to become the first snack brand with over 10,000 stores by March 2025 [3][6]. - The revenue from the snack business surged from 12% of total revenue in 2022 to over 98% in the first half of 2025, while the mushroom business's contribution dropped to 1.7% by 2024 [4][6]. - Revenue skyrocketed from over 500 million in 2022 to 32.3 billion in 2024, with 22.5 billion in the first half of 2025 [6]. Group 2: Financial Performance and Debt Issues - The number of stores increased dramatically from 160 in 2022 to 15,300 by mid-2025, covering 29 provinces, primarily targeting lower-tier markets [6][9]. - Despite rapid expansion, the net profit margin fell to just over 3% in the first half of 2025, with a loss reported in 2023, compared to a peak of 21% previously [6][9]. - Total liabilities rose from 332 million at the end of 2022 to 5.1 billion by the end of 2024, indicating a 15-fold increase in three years [7][10]. Group 3: Market Competition and Challenges - The snack industry is highly competitive, with rivals like "Zero Franchise Fee" initiatives, making it difficult for franchisees to achieve profitability [12][14]. - Wanchen's inventory increased from 63.2 million in 2022 to 1.6 billion in the first half of 2025, raising concerns about inventory management and franchisee sales [16]. - The company faces governance challenges with a family succession plan, as the new leader, born in 1993, must navigate the complexities of a public offering and high debt levels [20][22]. Group 4: Future Outlook and Market Position - The snack market remains promising, but the company must focus on efficiency and profitability rather than just scale [24]. - Wanchen's market share is currently only 0.91%, with the top five brands collectively holding 3.85%, indicating a fragmented market [20][22]. - The upcoming IPO may bring new challenges, as regulatory scrutiny will likely focus on high debt levels and the stability of the franchise system [22][24].