Investment Rating - The report initiates coverage with a "Buy" rating for Wancheng Group [3][5]. Core Insights - Wancheng Group has transformed from a leading edible mushroom producer to a high-growth player in the snack retail sector, achieving significant revenue growth in its new business line [1][12]. - The company has successfully integrated multiple snack brands and expanded its store network, with a target of 15,365 stores by mid-2025, contributing to a substantial increase in revenue and profit margins [1][13]. - The financial outlook is optimistic, with projected revenue growth rates of 56.0%, 14.9%, and 9.4% for 2025, 2026, and 2027, respectively, alongside a significant increase in net profit [3][4]. Summary by Sections Development History - Established in 2011, Wancheng Group focused on edible mushrooms, becoming a key player in the agricultural sector by 2020, with mushroom revenue reaching 540 million yuan in 2024 [1][12]. - In 2022, the company entered the snack retail market, rapidly expanding through acquisitions and establishing a robust store network [1][13]. Shareholding Structure - The controlling shareholder, Wang Zeneng, holds 34.4% of the company, guiding the expansion of the snack business through strategic acquisitions and incentivizing management with equity plans [2][41]. - The company has been consolidating its snack brands under a unified operational structure to enhance efficiency and profitability [2][44]. Stock Price Trends - Since July 2024, Wancheng Group's stock price has increased over eightfold, driven by improved profit margins and the recovery of minority shareholder interests [3][25]. - The company is expected to continue benefiting from its new store formats and operational efficiencies, which are anticipated to further enhance its market valuation [3][19]. Financial Forecast - Revenue is projected to grow significantly, with estimates of 50.4 billion yuan in 2025, 57.9 billion yuan in 2026, and 63.4 billion yuan in 2027, reflecting a compound annual growth rate (CAGR) of 56.0% [4][5]. - Net profit is expected to rise dramatically, reaching 1.29 billion yuan in 2025, 1.98 billion yuan in 2026, and 2.54 billion yuan in 2027, indicating a strong recovery and growth trajectory [4][5].

Core Insights - The core point of the article is the rapid expansion and transformation of Wanchen Group, the parent company of the "Haoxianglai" snack brand, as it seeks to go public in Hong Kong, capitalizing on the booming bulk snack market and facing increasing competition from peers like "Mingminghenmang" [1][3][11]. Company Overview - Wanchen Group originally focused on edible fungi and entered the bulk snack market in 2022, achieving a revenue surge from 66.57 million yuan in 2022 to 31.79 billion yuan in 2024, marking an increase of nearly 478 times [1]. - The company has aggressively expanded its store count, opening 9,776 new stores in 2024 alone, which translates to over 27 new stores daily [3]. - As of the end of 2024, Wanchen Group's revenue reached 32.33 billion yuan, with a net profit of 294 million yuan, demonstrating a significant turnaround from previous losses [3][6]. Market Dynamics - The bulk snack market has become a hotbed for new consumption trends, with a "low price + bulk" model rapidly penetrating both lower-tier cities and first-tier cities [1][2]. - Competitors like "Mingminghenmang" are also expanding, with plans to reach over 20,000 stores by September 2025 and projected revenues of 39.34 billion yuan [1][5]. Business Model - Wanchen Group's business model eliminates intermediaries by sourcing directly from manufacturers, allowing it to offer prices 20% to 30% lower than traditional supermarkets [4]. - The company's gross margin improved from 9.30% in 2023 to 11.41% in Q2 2025, indicating a competitive edge in supply chain management [4][6]. Financial Structure - As of June 2025, Wanchen Group's total assets were 7.46 billion yuan, with total liabilities of 5.14 billion yuan, resulting in a debt-to-asset ratio of 68.9%, indicating a high-leverage operational model [6]. - The company generated 1.298 billion yuan in cash flow from operating activities, supporting its high debt model [6]. Strategic Shifts - In response to market saturation and increased competition, Wanchen Group has slowed its expansion pace, opening only 1,468 new stores in the first half of 2025 [7]. - The company is transitioning towards a "hard discount" retail model, launching new store formats like "Laiyoupin" and "Haoxianglai All Food Selection" to diversify its offerings beyond snacks [8][9]. Brand Development - Wanchen Group is focusing on building its own brands to differentiate itself in a market characterized by product homogeneity and price wars [9]. - The company has introduced two private label series, "Haoxianglai Value" and "Haoxianglai Selection," to enhance product quality and consumer appeal [9]. Future Outlook - The company aims to leverage its IPO to optimize its financial structure and support its transformation into a global hard discount retailer, starting with Southeast Asia [11]. - However, the transition to a broader retail model poses challenges, including the need for supply chain restructuring and the establishment of brand identity in a competitive landscape [11].

Core Viewpoint - The article discusses the rapid growth and upcoming IPO of Wanchen Group, the parent company of the snack brand "Haoxianglai," highlighting the competitive landscape of the discount snack retail sector in China and the challenges it faces as it expands aggressively [3][5]. Group 1: Company Overview - Wanchen Group, originally focused on edible fungi, entered the discount snack market in 2022, achieving a revenue surge from 66.57 million yuan in 2022 to 31.79 billion yuan in 2024, marking an increase of nearly 478 times [3]. - The company plans to open 9,776 new stores in 2024, averaging over 27 new stores daily, which has significantly boosted its revenue [7]. - As of mid-2025, Wanchen Group reported a revenue of 22.58 billion yuan for the first half of the year, a year-on-year increase of 106.9%, with a net profit of 472 million yuan, a staggering increase of 50,359% [7]. Group 2: Market Dynamics - The discount snack sector has become a hotbed for new consumption trends, with major players like Wanchen and Mingming Hen Mang rapidly expanding their market presence [3][5]. - The competition is characterized by a "low price + bulk" model, which has been widely replicated in lower-tier cities, leading to a dual-strong competitive landscape [3][5]. - Wanchen's business model eliminates middlemen by sourcing directly from manufacturers, allowing it to offer prices 20% to 30% lower than traditional supermarkets [8]. Group 3: Financial Performance and Risks - Despite higher profit margins, Wanchen's revenue trails behind Mingming Hen Mang, with 31.79 billion yuan compared to Mingming's 39.34 billion yuan by the end of 2024, despite similar store counts [10]. - Wanchen's aggressive expansion has led to a high leverage model, with a debt-to-asset ratio of 68.9% as of mid-2025, indicating reliance on debt for growth [10][11]. - The company generated 1.298 billion yuan in cash flow from operations, supporting its high debt model, but faces risks if market conditions change [11]. Group 4: Strategic Transformation - In response to increasing competition, Wanchen is transitioning towards a "hard discount" retail model, characterized by minimal SKUs and low prices, aiming to provide high-quality products at lower costs [13][14]. - The company has launched its own private label brands to differentiate its offerings and reduce reliance on generic products, which often suffer from quality issues [15]. - Wanchen's IPO aims to optimize its financial structure and support its transformation into a global hard discount retailer, starting with Southeast Asia [17][18].

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].

Investment Rating - Maintain "Add" rating for the industry [5] Core Viewpoints - The report highlights the rapid expansion of the "Good Idea Whole Food Selection" stores in Jiangsu, focusing on a multi-category discount retail model that combines snacks, fresh fruits, and baked goods, aiming to cater to the upgrading consumption in lower-tier markets [1][2][4] - The store's product mix includes a significant focus on high-quality items, with a clear emphasis on customer service, such as offering free fruit cutting and washing services, indicating a shift from merely price-based competition to quality and service enhancement [2][11][15] - The report suggests that the head of the snack retail system is entering a phase of rapid expansion, with the potential for further differentiation in store types and a robust supply chain to support this growth [4][26] Summary by Sections 1. Multi-Category Expansion and Store Types - "Good Idea Whole Food Selection" is expanding its store types and product categories, with plans for rapid franchise growth [1][10] - The store has opened six locations in Jiangsu, focusing on community-centric locations with larger store sizes compared to traditional snack stores [11][13] 2. Product and Service Quality - The store's product categories have expanded to include fresh fruits, short-shelf-life baked goods, and a variety of dairy and beverage products, while maintaining a selective SKU approach [2][15] - The overall product quality is high, with pre-packaged fruits and well-known brand household products, enhancing customer loyalty through superior service [15][20] 3. Store Layout and Pricing Strategy - The store layout is designed for clear product zoning and customer flow, with a focus on larger single product displays [20] - Pricing remains competitive, with discounts on various categories compared to traditional supermarkets and online platforms, maintaining a value proposition for consumers [21][23] 4. Investment Recommendations - The report emphasizes the potential for significant growth in the snack retail sector, with established players poised to leverage their supply chain advantages and expand into new product categories [4][26] - The ongoing franchise model and the introduction of new store types are expected to enhance market coverage and operational efficiency [4][26]

Investment Rating - Maintain "Add" rating for the industry [5] Core Insights - The report highlights the transformation of retail through the expansion of multi-category discount formats, particularly focusing on the "Good Idea Whole Food Selection" in Jiangsu, which combines various store types and aims for rapid franchise expansion [1][4][10] - The "Good Idea Whole Food Selection" has successfully opened six stores in Jiangsu, emphasizing a community-centric approach with larger store sizes compared to traditional snack stores [11][24] - The product mix includes fresh fruits, short-shelf-life baked goods, and a selection of daily necessities, positioning the store more as a food supermarket rather than a simple discount retailer [2][15] Summary by Sections 1. Multi-Category Expansion and Store Types - The "Good Idea Whole Food Selection" is expanding its franchise model with multiple store types, aiming to adapt to various market needs and consumer preferences [1][10] - The company has introduced a diverse range of products, including fresh produce and baked goods, while maintaining a focus on cost-effectiveness and quality [2][11] 2. Store Layout and Customer Experience - The store layout is designed for clear product zoning and customer flow, enhancing the shopping experience and encouraging cross-selling among different product categories [3][20] - The stores feature a significant display area for selected SKUs, which contrasts with the dense layout of traditional supermarkets, thereby improving visibility and accessibility [20] 3. Pricing Strategy - The pricing strategy continues to emphasize value, with many products priced significantly lower than competitors like Hema and traditional supermarkets, maintaining a competitive edge in the market [21][23] - The report provides specific pricing comparisons, showing that many items are offered at discounts ranging from 50% to 80% compared to other retailers [23] 4. Investment Recommendations - The report suggests that the industry is entering a phase of rapid expansion, with leading companies like Wanchen Group and Mingming Hen Mang poised to capitalize on their established supply chains and operational efficiencies [4][26] - The potential for further market penetration and the introduction of additional store formats is highlighted as a key growth driver for the industry [4][26]