Guolian: Initiates a "buy" rating on WL DELICIOUS (09985), with spicy snacks showing higher prosperity than the industry as a whole.

Guolian released a research report stating that, considering the second growth curve of the company's popular product "W.L. Delicious" is still in the period of volume growth, with a rich reserve of new products and smooth product iteration, the stock is given a "buy" rating for the first time. It is forecasted that the company's revenue for 2024-2026 will be 5.935/6.939/7.806 billion yuan respectively, and the net profit attributable to the parent company will be 1.106/1.313/1.505 billion yuan respectively (year-on-year growth of 25.62%/18.76%/14.6%), with an EPS of 0.47/0.56/0.64 yuan per share. Guolian's main points are as follows: New consumption + new channels, nurturing structural opportunities According to F&S forecasts, the overall CAGR of China's spicy snacks industry will be around 9.6%/6.8% over the next three years, with the prosperity of the spicy snack market higher than the overall industry. (1) Sub-categories: Spicy vegetable snacks, flavored noodle products, and spicy bean curd snacks are the three sub-categories with the fastest growth rates, with an expected CAGR of 17.2%/8.9%/8.0% over the next three years. (2) Channels: Snack retailers and e-commerce channels are rapidly increasing their market share, reaching 9.4%/17.4% by 2023. With new product iterations and channel optimization, the market share of W.L. Delicious is expected to increase, consolidating its leading position in the industry. Skillful insight, standing in the wind of victory (1) Products: As a pioneer in the spicy snack industry, the company adheres to the "multi-category, flagship product" strategy, with the flagship product "W.L. Delicious" showing stable growth, and the successful incubation of the second growth curve product "Mo Yu Shuang" driving high double-digit growth in vegetable products. The product layout is complete and the iteration is smooth. (2) Channels: The company actively embraces each round of industry changes, transitioning from traditional channels to modern channels and emerging channels such as snack retailers and e-commerce, gradually expanding into overseas markets. By building a first-tier distribution model, introducing individual distributors, and combining sales assistance and sales support, the company focuses on fine management and tapping into incremental growth. (3) Marketing: W.L. Delicious always stands with young people, accurately seizing each promotional opportunity to establish a quality image of safety and health.