On August 16, Financial Association News (Reporter Wu Weiling) reported that in the first half of the year, Wanchen Group (300972.SZ) further expanded its scale in the bulk snack business, and the scale effect also drove the net profit margin of this sector to increase slightly quarter-on-quarter.

The Wanchen Group released its semi-annual performance report tonight. In the first half of the year, the company achieved operating income of 10.915 billion yuan, up 392.45% year-on-year; the net profit attributable to the parent company was 0.9346 million yuan, turning a loss into a profit year-on-year; the non-GAAP net profit attributable to the parent company was -3.0812 million yuan.

In the first half of the year, the company's bulk snack business achieved revenue of 10.674 billion yuan, an increase of 447.78% year-on-year, accounting for 97.79% of the revenue. After deducting the share payment expense, the net profit was 0.28 billion yuan. The mushroom business achieved revenue of 0.241 billion yuan, a decrease of 10.03% year-on-year, and suffered losses. The main reason was the impact of changes in market conditions and the Q2 entering the seasonal price downturn. The sales price of the main product, mushroom, decreased significantly year-on-year.

The business of bulk snacks continued to expand in the first half of the year. During the reporting period, the net increase in stores of the "Want Snacks" brand owned by the company reached 1912, and the number of stores at the end of this period reached 6,638. At the same time, the profit margin index slightly increased. Looking at the individual quarters, in Q1 and Q2 this year, the net profit of the bulk snack business, after deducting the share payment expense, was 0.117 billion yuan and 0.163 billion yuan, with corresponding net profit margins of 2.50% and 2.72%, respectively.

Regarding the quarter-on-quarter increase in net profit margin in the second quarter, Wanchen Group stated that as the income scale grew and the store density increased, the scale effect of the company's bulk snack business became increasingly apparent, and the operational efficiency of each core business link continued to improve. At the same time, the storage utilization rate, turnover efficiency, staff efficiency, and logistics cost rate continued to be optimized, effectively improving the cost-effectiveness ratio of the bulk snack business.

With nationwide expansion, the Wanchen Group achieved scale growth in the bulk snack business, but also brought about a surge in costs. According to the financial report, the company's sales expenses in the first half of the year amounted to 0.491 billion yuan, a year-on-year increase of 331.82%; management expenses were 0.353 billion yuan, a year-on-year increase of 185.31%. In explaining the reasons for the changes in these two expenses, the Wanchen Group mentioned the increase in bulk snack business.

Since the beginning of this year, as competition in the bulk snack industry intensified, various brands have frequently engaged in store price wars and franchisee "flipping." Brand investment is becoming more and more important. From the perspective of Wanchen Group, the company announced in June that it will provide a total of no more than 0.25 billion yuan in financial support to three holding subsidiaries to further meet their capital needs for daily production and operation. After providing financial support this time, the company has provided a total of over 0.449 billion yuan in financial assistance.