Summary of Wei Long's Conference Call Company Overview - **Company**: Wei Long (卫龙) - **Industry**: Snack Food Industry, specifically focusing on spicy snacks and konjac products Key Points and Arguments Brand Building - Wei Long has effectively established its brand identity in the spicy snack sector, particularly in the "spicy strips" category, through innovative marketing strategies that resonate with younger consumers, especially those born in the 1980s and 1990s [4][2] - The company initially avoided high advertising costs, opting for engaging and reverse marketing tactics, which proved to be cost-effective and impactful [4][2] Channel Development - In 2015, Wei Long upgraded its product packaging from small to large sizes, allowing entry into modern KA and BC channels, which increased average transaction value and profit margins [5][2] - As of now, the company has achieved a network coverage of 430,000 outlets and has over 1,000,000 product placements [6][2] Product Strategy - Wei Long's core product, spicy strips, maintains a leading market position with stable growth [7][2] - The konjac snack category, which faced a slowdown in growth from 2022 to 2023, is expected to accelerate again in 2024, showing potential similar to spicy strips [7][2] Market Trends - The spicy snack market is growing faster than the overall snack market, with local companies having more room for development due to their closer alignment with consumer preferences [8][2] - The terminal market size for spicy strips is approximately 50 billion RMB, while the konjac market is projected to reach 12 billion RMB in 2024, with potential to match or exceed the spicy strips market size [10][2] Factors Driving Konjac Product Development - The growth of konjac products is driven by health trends and active promotion from companies like Wei Long [11][2] - Market feedback indicates that the growth of konjac products has exceeded expectations, despite increased competition [11][2] Future Development Focus - Wei Long plans to continue channel refinement and introduce new products, with seaweed products expected to generate 500 million RMB in sales this year, reflecting a growth of over 50% [3][2][12] - The company is committed to maintaining its research and development capabilities to stay ahead in innovation [12][2] Industry Trends - The Chinese snack industry is witnessing the emergence of new categories led by domestic companies, indicating a growing capability to create and scale new brands [13][2] Investment Recommendations - From a mid to long-term perspective, Wei Long's comprehensive channel layout and validated product strength suggest strong overall capabilities [14][2] - Short-term catalysts include new product launches and maintaining a growth rate of over 50% in the konjac segment, making it a worthy investment target [14][2] Additional Important Insights - The spicy snack market's appeal lies in its addictive nature, which fosters high consumer loyalty and market capacity [8][2] - The health attributes of konjac products align with current consumer trends, enhancing their market potential [9][2]

Core Viewpoint - The company reported a strong performance in H1 2025, with revenue and net profit both increasing by 18.5% year-on-year, indicating robust operational quality and growth potential in key product categories [1][2]. Financial Performance - In H1 2025, the company achieved revenue of 3.48 billion yuan and a net profit of 736 million yuan, both reflecting an 18.5% year-on-year increase [1]. - The net profit margin stood at 21.1%, maintaining stability despite high raw material costs for konjac, exceeding market expectations [2]. - The gross profit margin was 47.2%, down by 2.6 percentage points year-on-year, with specific margins for noodle products and vegetable products at 48.4% and 46.6%, respectively [2]. Product Performance - Noodle and vegetable products saw a year-on-year growth of 21% in H1 2025, with core products growing over 20% [1]. - The vegetable product segment continued to show high growth, driven by the success of the konjac super product [1]. - Other products experienced a significant decline, primarily due to the discontinuation of soft-boiled eggs, but new product launches like stinky tofu are expected to mitigate short-term impacts [1]. Strategic Initiatives - The company is actively adjusting its product offerings and channel strategies to adapt to market changes, focusing on enhancing the quality and quantity of retail outlets [1]. - Emerging channels such as retail and wholesale are growing rapidly, while traditional channels are being optimized [1]. Future Outlook - The company anticipates stabilization in the spicy strip business in H2 2025, with new flavors in konjac and seaweed products expected to drive growth [3]. - The long-term outlook remains positive due to strong product innovation capabilities, robust channel potential, and effective marketing strategies [3]. - Revenue projections for 2025-2027 are estimated at 7.52 billion, 9.05 billion, and 10.62 billion yuan, with net profits of 1.45 billion, 1.80 billion, and 2.15 billion yuan, respectively [3].