WL DELICIOUS (09985) has been assigned a "Buy-A" investment rating with a 6-month target price of HK$14.27. On the product front, classic spicy gluten continues to generate stable cash flow, while vegetable products such as konjac and seaweed snacks capitalize on health-conscious consumer demand. In 2024, these products achieved revenue of RMB 3.37 billion, accounting for 54% of total revenue and becoming the largest product category for the first time. In terms of channels, the foundation in supermarkets and convenience stores remains solid. Since going public, the company has rapidly expanded into bulk snack retail and live-streaming e-commerce, conducting 94 live broadcasts on Douyin over 90 days, with online sales proportion continuing to rise. For supply chain, the company directly operates five major factories in Henan with 5G production lines, reducing costs while maintaining food safety standards.
The spicy gluten industry shows expansion trends, with product flavor differentiation reshaping the competitive landscape, where WL DELICIOUS's sweet-spicy segment maintains a leading market position. From a competitive advantage perspective: 1) WL DELICIOUS has established itself as a high-trust brand in consumers' minds through automated and transparent factories, improving production efficiency simultaneously. 2) The company has formed a differentiated competitive strategy across five major flavor profiles: sweet-spicy, numbing-spicy, aromatic-spicy, durian-spicy, and regional-spicy, continuously innovating and enriching its product matrix. 3) WL DELICIOUS captures the social characteristics of spicy gluten consumption scenarios, transforming spicy gluten into social currency for young consumer groups, effectively enhancing user loyalty. 4) The dual-track differentiated strategy in traditional channels strengthens control over distributors, with cooperative distributors increasing to 1,879 in 2024, up approximately 10% year-over-year. The digital channels operate through a three-track parallel system of "bulk snacks - online platforms - O2O," forming three-dimensional advantages. Moving forward, WL DELICIOUS is positioned to further expand its leading advantage through existing channel advantages and brand strength.
Additionally, konjac products successfully balance stimulating flavors with consumers' health demands. The industry has shown rapid growth in recent years, with the terminal market achieving a compound annual growth rate exceeding 20% from 2014 to 2023. WL DELICIOUS leverages its channel and production capacity advantages to capture consumer mindshare early. In recent years, the company has intensified large-scale production efforts and upstream raw material control, further strengthening profit resilience. Looking ahead: 1) From an industry perspective, the konjac industry remains in its early growth stage with broad downstream market potential. Konjac's versatility provides significant room for midstream flavor innovation and processing, with category dividends far from peaking. 2) From a corporate perspective, WL DELICIOUS needs to horizontally strengthen flavor research and development, fully utilize existing brand influence to promote new flavors, and increase distribution density while expanding SKU breadth to consolidate its leading position through early strategic positioning.
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