On the afternoon of September 8, Yanker Shop Food Co.,Ltd. (002847.SZ) held its 2025 interim earnings conference, where management addressed concerns regarding cost pressures, declining gross margins, and overseas market expansion strategies, revealing multiple challenges and opportunities behind the company's performance.
According to the interim report, Yanker Shop achieved revenue of 29.41 billion yuan during the period, representing a year-on-year increase of 19.58%, while net profit attributable to shareholders reached 3.73 billion yuan, up 16.7% year-on-year.
Comparing data from recent years, Yanker Shop's revenue growth rates for 2023 and the first half of 2024 were 56.54% and 29.84% respectively, while net profit growth rates were 90.69% and 30% respectively, showing a continuous weakening growth momentum.
**Five Years of Gross Margin Decline**
Analysis of the interim report reveals that Yanker Shop's gross profit levels are under sustained pressure.
In the first half of the year, while the company's revenue grew 19.58%, operating costs surged 24.67% to 20.68 billion yuan, with cost increases significantly outpacing revenue growth. As a result, the gross margin fell from 32.53% in the same period last year to 29.66%, a decline of 2.87 percentage points.
This marks the fifth consecutive mid-year decline for this metric. The interim gross margin stood at 41.78% in mid-2020, representing a cumulative decline of over 12 percentage points over five years, clearly reflecting the dual challenges the company faces in cost control and pricing strategies.
During the earnings conference, Yanker Shop's Board Secretary Zhang Yang explained the gross margin decline, identifying three core reasons: First, changes in channel structure with increased revenue share from emerging channels. Since 2021, the company's successful channel transformation has significantly increased revenue from emerging channels such as snack bulk stores and social commerce platforms. "These emerging channels are popular with consumers due to their high turnover, high efficiency, and relatively low retail prices, but the lower retail prices have also led to a decline in the company's gross margin."
Second, the reclassification of logistics expenses. Starting from 2021, logistics expenses have been included in operating costs according to new accounting standards, with logistics expenses accounting for over 4% of operating revenue.
Third, rising costs of certain raw materials, primarily due to price increases in konjac refined flour and oil-based raw materials in the first half of 2025, further compressing product gross margins.
Fortunately, expense control has offset some of the profit pressure from rising costs.
In the first half of the year, Yanker Shop's selling expenses decreased by 4.74% year-on-year, and administrative expenses fell by 5.94%. Ultimately, the company's net profit margin dropped from 13.03% in the first half of 2024 to 12.57%, a relatively controlled decline.
**Cost Challenges**
Konjac products, which face high raw material prices, represent Yanker Shop's most impressive business segment. During the earnings conference, management acknowledged that the first half's performance growth benefited from the company's strategic focus on the "Big Demon King" sesame sauce vegetarian tripe product.
Specifically, leisure konjac products achieved revenue of 791 million yuan in the first half, up 155.1% year-on-year, driving the spicy braised snack segment's revenue growth of 47.05% to 1.32 billion yuan, accounting for approximately 45% of total revenue. In contrast, other subcategories within the spicy braised snack segment showed relative weakness, with leisure bean products growing only 12.71%, while meat and poultry products and other spicy braised snacks both declined by double digits.
Among other categories, dried fruit and jelly revenue reached 428 million yuan, deep-sea snacks generated 363 million yuan, and egg-based snacks achieved revenue of 309 million yuan, all showing varying degrees of growth. However, baked potato products saw significant decline with revenue of 459 million yuan, down 18.42% year-on-year.
Facing persistently high konjac raw material prices, Zhang Yang indicated that the company has adopted multiple response measures: leveraging the upstream layout of the controlling shareholder, gaining certain cost advantages through advance stockpiling based on konjac raw material price trend predictions; continuous lean manufacturing and intelligent manufacturing to improve production efficiency; and product strategy adjustments to actively address challenges.
Regarding future konjac raw material price trends, Zhang Yang noted that they are primarily influenced by national planting area and weather conditions, which directly determine konjac production and subsequently trigger price fluctuations. Currently, konjac planting areas are expected to expand, and downstream demand continues to grow, but the ultimate price direction will still be determined by supply and demand dynamics.
Konjac products are not only distributed domestically but also exported overseas.
Yanker Shop outlined its internationalization path in its 2024 annual report: in 2025, the company will invest $30 million to build a new Thai konjac production base, launch localized Mowon brand konjac products, focus on konjac and quail egg categories to penetrate Southeast Asia, and expand into Japanese, Korean, European, and American markets.
In the first half of the year, Yanker Shop's overseas market revenue reached 96.35 million yuan, showing significant growth from 141,700 yuan in the same period last year.
Regarding this, Yanker Shop's Board Secretary Zhang Yang noted during the earnings conference that the company is optimistic about overseas market potential and expects continued volume growth in the future. The company plans to further expand konjac product markets in Southeast Asia, particularly after establishing the factory in Thailand, which is expected to provide better cost advantages. "Currently, over 80% of sales revenue comes from Thailand."
However, Zhang Yang did not directly address investor concerns about "when the $30 million investment in the Thai konjac base will begin production and contribute to revenue."
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