CICC has released a research report, assigning WL DELICIOUS (09985) a target price of HK$15, corresponding to approximately 19/17 times the estimated P/E ratio for 2026/27. The current share price implies 2026/27 P/E multiples of about 12.1/10.3 times, suggesting an upside potential of around 61%. The outperform industry rating is maintained. The report introduced a new 2027 profit forecast of 1.928 billion yuan, factoring in increased expense allocations for 2026.
Key viewpoints from CICC are as follows:
Vegetable product revenue for 2025 exceeded 4.5 billion yuan, with the net profit margin improving to 19.8%. 1) Revenue: Second-half 2025 vegetable product revenue reached approximately 2.4 billion yuan (up 25.6% year-on-year, an increase of about 500 million yuan). Revenue from flavored flour products and bean products/others was 1.244 billion yuan and 100 million yuan, respectively. By channel: second-half 2025 offline/online channel revenue increased 12%/15.6% year-on-year. Overseas revenue in the second half of 2025 was 63 million yuan, up 43.4% year-on-year. 2) Profitability: The company's gross margin for vegetable products in the second half of 2025 increased 2.6 percentage points quarter-on-quarter to 49.1%. The gross margin for spicy strips rose 0.8 percentage points quarter-on-quarter to 49.1%, reflecting further overall production efficiency improvements (overall capacity utilization increased 0.2 percentage points to 77.9%). Sales expenses: The second half is a peak sales season and new product promotion period. Second-half 2025 sales expenses increased 16.9% year-on-year, with the expense ratio up 0.7/2.1 percentage points year-on-year/quarter-on-quarter, respectively. Overall, the company achieved a high net profit margin of 19.8% for 2025.
The company is focusing on channel display and efficiency improvements for 2026, while new flavors and products are expected to contribute steadily. 1) Revenue: The report anticipates a high likelihood of revenue growth exceeding 15% in 2026, primarily driven by vegetable products, including sesame sauce konjac, wind-dried seaweed, and new konjac product flavors (such as porcini mushroom and pounded chicken foot). The company emphasizes omni-channel layout, display positioning, shelf presence, and brand visibility. It is expected to continue upgrading its digital systems to enhance execution. 2) Efficiency gains in supply chain and channels: The report notes that the company has locked in prices for most raw material types, making the impact manageable. There remains room for efficiency improvements in supply chain, production automation, and digitalization.
Risk warnings include potential underperformance of new flavors and products, intensified competition, and significant fluctuations in raw material prices.
Comments