Weilong achieved revenue of 2,327 million yuan in the first half of the year, up 3.0% year on year; net profit was 447 million yuan, turning loss into profit year over year, with a mid-term dividend payout ratio of about 60%. On the sales side, overall sales volume fell by 18.1% during the reporting period, and the average sales price increased by 23.7%, mainly because product price increase measures were gradually conveyed to the sales side from mid-2022 to the end of 2022; sales volume of gluten, as the largest category, fell by 24%, and unit price increased by 23%, mainly due to superposition companies actively eliminating low-priced products that cost 5 cents in the first half of this year. In the first half of this year, the revenue contribution of the two major categories was even. Gluten's revenue contribution fell from 59% to 55%, while the vegetable category, as the company's second largest growth curve, increased its revenue contribution from 36% to 40%, with only a slight drop in sales volume. At the marketing level, channel allocation adjustments were made quickly and in place in the second quarter, a snack mass sales channel cooperation model was promoted in line with the market environment, along with customized product chains, and continued to consolidate ancillary marketing strategies. In terms of new promotion, it is expected that the promotion density in the second half of the year will be higher than in the first half of the year, and there will be more new regulations on the snack channel. In the second half of the year, the company expects to achieve sales breakthroughs by relying on snack channels and the launch of new products. At the performance meeting, management proposed an annual target of achieving an increase of about 10% in both revenue and net profit, while maintaining the operating profit margin at 18-20%.

At the beginning of its development, the company successfully came out of the market with “spicy strips” as a major product, but it still adheres to the “multi-category big single product” development strategy, focuses on innovative research and development in various categories, and combines channel expansion to create a customized product chain to establish a stronger brand in a consumer market environment that is gradually recovering.

The monthly data for snack sales channels showed a sharp month-on-month jump in June-August. The annual revenue contribution was unpredictable, completely different from the guidelines at the end of the first quarter. With the gradual recovery trend of the consumer industry, traffic from traditional offline stores and supermarket channels has declined, and the company has made a new layout for offline channels in line with changes in market conditions. In the second quarter, a new model of cooperation with snack mass sales channels was quickly established. The company said that the current data for June-August can already show an impressive growth rate, and the channel has jumped dozens of months over month in a row. The price of the same product in snack shops is about 20-30% lower than in supermarkets. Considering that there are competition and diversion issues with new channels or traditional supermarket channels, the company has developed differentiated price chains and product specifications while establishing a snack channel cooperation model. Currently, it has launched 10 types of specifications, and is expected to launch more in the second half of the year.

It is expected that the number of new promotions in the second half of the year will be higher than in the first half of the year. Recently, new brands with segmented flavors will be launched, and online channels will be used as an efficient integrated marketing window. The company said that there is still plenty of room for development in the spicy snacks market, yet the concentration of brands has not been high. In this environment, the company will continue to create “multiple categories of major products” and achieve sustainable brand value through changes in marketing models.

The company's current stock price is HK$7.3, which corresponds to 15.7 times the price-earnings ratio agreed by Bloomberg Market in 2023.