Core Viewpoint - Wei Long Delicious (09985) has seen a nearly 9% increase in stock price, currently at 12.1 HKD, with a trading volume of 87.75 million HKD, indicating strong market interest and confidence in the company's growth potential [1] Company Summary - The company is recognized as a leader in the spicy snack sector, leveraging its strong market position in both spicy strips and konjac products to build competitive barriers across brand, product, and channel dimensions [1] - The company is approaching a cost inflection point, with profit elasticity expected to be released significantly as upstream farmers increase planting due to rising prices, leading to an expansion in planting area [1] - With new production capacity expected to be gradually released by 2025, a downward cost cycle for konjac powder is anticipated by 2026 [1] - The company has successfully entered high-end channels, exemplified by the introduction of its mushroom konjac product into Sam's Club, marking a shift from mass distribution to premium membership-based channels [1] Industry Summary - The konjac snack food industry has maintained rapid growth and is currently in a phase of rapid expansion, although upstream raw material supply is tight and midstream capacity is limited, indicating that the industry will eventually enter a consolidation phase [1] - The competitive landscape is becoming more concentrated, with leading companies solidifying their competitive barriers [1]

Group 1 - The core viewpoint of the article highlights the strong market position of Weilong Delicious (09985) as a leading player in the spicy snack sector, driven by its dual product categories of spicy strips and konjac, which create competitive barriers across brand, product, and distribution channels [1] - The company is expected to experience a profit elasticity release as the cost inflection point approaches, with an increase in planting enthusiasm among upstream farmers leading to an expansion in planting area [1] - By 2026, the company anticipates a downward cost cycle for konjac powder as new production capacity is gradually released, indicating a positive outlook for profitability [1] Group 2 - The successful entry of the company's mushroom konjac product into Sam's Club in July marks a significant shift from mass distribution channels to high-end membership channels, enhancing product recognition and channel structure [1] - The industry is currently in a rapid expansion phase, but the tight supply of upstream raw materials and limited midstream capacity suggest that the industry will eventually enter a consolidation period [1] - The competitive landscape is becoming more concentrated, with leading companies solidifying their competitive barriers, indicating a trend towards industry consolidation [1]

Investment Rating - The report assigns an "Outperform" rating to multiple companies including Nike, Midea Group, JD Group, Haier, Gree Electric, Anta Sports, and others, while Lulu Lemon is rated as "Neutral" [1]. Core Insights - The A/H snack and retail sectors have shown strong performance, while overseas Nike has negatively impacted sportswear performance [4][11]. - The report highlights a recovery in overseas consumer sectors and anticipates the implementation of supportive consumption policies in the A/H markets [3]. Performance Review by Sector - **Snacks**: The snack sector saw a weekly increase of 5.7%, with companies like Qiaqia Food and Three Squirrels rising by 6.0% and 7.5% respectively. The performance is attributed to seasonal sales and expectations for new products in Q1 2026 [5][13]. - **Retail**: The retail sector increased by 2.3%, driven by the rapid expansion of Wancheng Group's stores and positive same-store sales growth [6][14]. - **Overseas Cosmetics**: This sector rose by 2.4%, with notable increases from ELF Beauty and Estée Lauder [6][14]. - **Luxury Goods**: The luxury sector increased by 0.8%, with Samsonite benefiting from high-end consumer recovery [6][14]. - **Domestic Sportswear**: This sector experienced a decline of 0.3%, with Li Ning showing a 7.5% increase due to the opening of a flagship store [6][14]. - **Gold and Jewelry**: This sector fell by 1.9%, with Chow Tai Fook and other companies facing price increases and market volatility [6][14]. - **Overseas Sportswear**: This sector declined by 2.6%, primarily due to Nike's poor performance, which saw a 13.0% drop [6][14]. Valuation Analysis - The report indicates that most sectors are currently valued below their average over the past five years. For instance, the expected PE for the overseas sportswear sector is 31.2 times, which is 59% of its historical average [9][15]. - Other sectors such as domestic sportswear, gold and jewelry, and luxury goods also show lower expected PE ratios compared to their historical averages, indicating potential investment opportunities [9][15].

Core Viewpoint - The article discusses the recent backlash against Sam's Club for removing popular products like low-sugar snacks and replacing them with items that consumers find less appealing, leading to dissatisfaction among members [1][3][9]. Product Changes - Sam's Club has recently made significant adjustments to its product offerings, including the removal of high-repurchase-rate items such as sun cakes and low-sugar egg yolk pastries, while introducing new products like low-sugar snacks and oatmeal cakes [1][9]. - Specific products that have been removed include the low-sugar Holi-Ryo pie and the cow mushroom konjac, which were previously popular among consumers [5][10]. Consumer Reactions - Many consumers expressed frustration on social media, feeling that Sam's Club is not providing value for their membership fees by offering products easily available elsewhere [3][9]. - The high approval rating of the removed Holi-Ryo pie, which had a 93.6% positive feedback rate, highlights the disconnect between consumer preferences and the company's product strategy [9]. Company Response - Walmart, the parent company of Sam's Club, acknowledged the feedback from members regarding product selection and stated that it would consider this input in future product strategies [11][12]. - Sam's Club has also indicated that it is aware of the recent public sentiment and plans to hold high-level meetings to discuss potential responses to the backlash [15]. Product Customization - Some brands, such as Holi-Ryo and Lulumei, have confirmed that their products are specially customized for Sam's Club, tailored to meet the preferences of its membership base [14][16]. - The introduction of these customized products is part of a strategy to differentiate offerings and cater to health-conscious consumers [14].

Core Viewpoint - The article discusses the recent controversy surrounding Sam's Club due to the removal of popular products and the introduction of new items, leading to consumer dissatisfaction and questions about the selection standards of the store [1][2][5]. Group 1: Product Changes and Consumer Reactions - Sam's Club has faced backlash from consumers for discontinuing high-repurchase-rate products like sun cakes and low-sugar egg yolk pastries, while introducing new items such as low-sugar Holley Friend pies and other products that are perceived as less desirable [2][4]. - The removal of the Holley Friend pie, which was marketed as having "80% less sugar" and "30% more cocoa," has particularly drawn criticism, with a price of 49.9 yuan for a box of 48 pieces and a high approval rating of 93.6% from over 9,000 reviews [11][12]. - Consumers have expressed feelings of being treated unfairly, questioning whether their membership fees are justified when they can find similar products elsewhere [4][5]. Group 2: Business Performance and Membership Structure - Sam's Club, a subsidiary of Walmart, has over 800 stores globally and is a significant revenue source for Walmart, with net sales in China reaching $6.7 billion (approximately 48.02 billion yuan), a year-on-year increase of 22.5% [14][15]. - The annual membership fee for regular members is 260 yuan, while premium members pay 680 yuan [15]. - The company has been expanding its store presence, adding seven new locations in the past 12 months, and has maintained strong growth in both membership and e-commerce sales [15]. Group 3: Market Positioning and Consumer Expectations - Experts suggest that differentiation is crucial for membership warehouse stores, as consumers expect unique products that are not available in regular retail channels [13][16]. - Quality has become a key factor for Chinese consumers, overshadowing traditional considerations like brand and price, which has contributed to the success of stores like Sam's Club [16].

Core Viewpoint - Recent product adjustments by Sam's Club have led to consumer dissatisfaction, particularly regarding the removal of popular items in favor of more common products, raising questions about the selection criteria [1][10][17]. Group 1: Consumer Reactions - Many consumers expressed disappointment over the removal of favored products like rice pudding and low-sugar egg yolk pastry, stating that they are now offered items easily found in local supermarkets [3][8]. - Some customers have even reached out to Sam's headquarters, requesting the return of their preferred specialty foods [6]. - The sentiment among members is that they are being sold products that do not justify the membership fee, leading to feelings of being taken advantage of [10][22]. Group 2: Product Changes and Quality Concerns - Sam's Club has recently introduced new products in collaboration with popular brands, but the lack of brand recognition on some items has caused confusion and dissatisfaction among members [17]. - The newly launched low-sugar Good Friend pie, priced at 49.9 yuan for 48 pieces, received negative reviews for being overly sweet despite its low-sugar label [12][14]. - The recent product adjustments have led to a decline in consumer trust, as members feel that the quality and uniqueness of offerings are diminishing [17][22]. Group 3: Membership and Market Position - Sam's Club operates with an annual membership fee of 260 yuan for regular members and 680 yuan for premium members, positioning itself as a leading membership warehouse globally with over 800 stores [20]. - According to Pacific Securities, Sam's Club has achieved double-digit growth by catering to the differentiated needs of middle-class families, focusing on high-quality and cost-effective products [20]. - Experts emphasize that differentiation and product quality are essential for membership warehouse stores to maintain their value proposition and consumer loyalty [22].