Haitong International: Target price of HK$5.76 for the initial “superior than market” rating for China Wangwang (00151)
The Zhitong Finance App learned that Haitong International released a research report saying that China's Wangwang (00151) FY2025-2027 revenue is expected to be 240.5/246.5/25.27 billion yuan respectively, up 2.3%/2.5% year-on-year; net profit to mother is 41.7/44.61 billion yuan, a year-on-year change of -3.8%/+5.7%/+4.6%, and the corresponding EPS is 0.35/0.37/0.39 yuan respectively. Referring to comparable company valuations, the company was given 15x PE for FY2025 (fiscal year ending March 2026), with a corresponding target price of HK$5.76, with 15% upward room (based on the closing price on December 24, 2025). For the first time, coverage was given a “better than market” rating.
Haitong International's main views are as follows:
The food and beverage industry has a multi-track layout, and comprehensive marketing continues to enhance brand power
After more than 60 years of development, China's Wangwang has become a nationally famous leading food and beverage company. Its business scope covers various racetracks such as rice crackers, milk drinks, and snack foods. The company's equity structure is concentrated, internal governance is stable, and most of the company's executives have rich industry experience. Wangwang actively carries out multi-faceted marketing, greatly increasing brand awareness through designing advertising slogans and building brand IP, making Wangwang a well-known national brand.
The pillar business, dairy beverages, has been steadily expanded, new products and new channels drive the recovery of rice crackers, and emerging channels and markets have become growth engines
The dairy beverage category FY18-24CAGR, which accounts for more than half of the revenue, is about 3.7%. Milk drinks have the attributes of both dairy products and soft drinks. In recent years, they have benefited from a steady increase in consumer demand for flavors. The neutral dairy drink circuit to which the big single product Wangzai Milk belongs has good prospects and relatively moderate competition. The bank expects FY25-27 dairy drink revenue to grow 0.5%/2%/2%. The revenue ratio of FY25H1 in the rice crackers business has reached double digits. Driven by new channels and new products, growth is expected to resume. FY25-27 rice crackers revenue is expected to increase by 3.5%/2%/2%. Revenue from snack foods has maintained good growth. The bank expects FY25-27 snack food revenue to grow by 5%/4%/4%. The company is actively seeking breakthroughs through organizational transformation, expanding emerging channels, and boosting overseas markets. Despite pressure from traditional channels, snack sales, platform and content e-commerce, instant retail, and OEM channels are developing well. In addition, the Asian market has benefited from rapid growth in candy and confectionery. The share of non-traditional channel revenue from 21H1 to 25H1 has increased from less than 10% to about 35%, and emerging channels and markets are expected to continue to support revenue growth.
Controllable raw material costs+continuous optimization of operational efficiency. Profit levels are expected to rise after short-term pressure
The company's gross margin FY23-24 has improved due to falling costs. The company will use domestic substitution and other measures to cope with the increase in the price of imported milk powder, and the cost of the remaining main raw materials is basically manageable. In addition, in recent years, the company has strengthened the control of channel expenses and optimized investment in warehousing and logistics. Although the cost ratio was briefly pressured by FY24H2 due to organizational structure optimization promoted by FY24H2, the bank expects operating profit margins in various categories to rise after short-term pressure. The overall EbitMargin for FY25-27 is expected to be 23.8%/23.9%/24.1%.
Risk warning: Increased industry competition, fluctuating raw material prices, food safety risks.