Guosheng Securities: The channel dividends in the snack sector are narrowing, leading to differentiated industry growth
Guosheng Securities released a research report indicating that in the first half of 2025, the overall revenue of the snack sector will decline by 2.2% year-on-year, and the net profit attributable to the parent company will decrease by 40.3%. Although channel benefits still exist, they are marginally shrinking, and companies need to rely on creating blockbuster products and expanding channels to drive growth. There are differentiated developments among companies in the industry, with those able to achieve product and channel increments having higher growth potential. Overall gross profit margins are declining, increasing profit pressure
According to the Zhitong Finance APP, Guosheng Securities released a research report stating that the overall revenue of the snack sector in 25H1 experienced a year-on-year decline. The channel dividend still exists but is marginally shrinking, and the growth drivers are more from the creation of explosive products or the expansion of self-channels. In the context of narrowing industry channel dividends, companies are showing differentiated development directions, and those that can achieve product and channel increments have higher growth potential.
The main points of Guosheng Securities are as follows:
25H1: Industry β weakens, individual stocks α stand out.
In 25H1, the snack sector achieved overall revenue of 25.51 billion yuan, a year-on-year decrease of 2.2%. The channel dividend still exists but is marginally shrinking, and the growth drivers are more from the creation of explosive products or the expansion of self-channels. The net profit attributable to the parent company in 25H1 for the snack sector was 1.09 billion yuan, a year-on-year decrease of 40.3%. On one hand, the industry generally faces cost pressures, and on the other hand, during the phase of weakened channel dividends and declining scale effects, the company's own expansion investments in branding and products create a dual profit squeeze. The gross profit margin of the snack sector in 25H1 decreased by 2.1 percentage points year-on-year to 28.3%, while the sales/management expense ratios increased year-on-year by 1.0/-0.2 percentage points to 18.3%/4.5%, and the net profit margin decreased by 2.7 percentage points year-on-year to 4.3%.
25Q2: Revenue accelerates quarter-on-quarter, but profit pressure increases.
In 25Q2, the overall revenue of the snack sector was 11.09 billion yuan, a year-on-year increase of 2.2%. In the context of narrowing industry channel dividends, companies are showing differentiated development directions, and those that can achieve product and channel increments have higher growth potential. The net profit attributable to the parent company in 25Q2 for the snack sector was 250 million yuan, a year-on-year decrease of 55.1%. The narrowing scale effect, cost pressures, and expanded expenses all created profit pressure. The gross profit margin of the snack sector in 25Q2 decreased by 1.7 percentage points year-on-year to 28.4%, while the sales/management expense ratios increased year-on-year by 0.9/-0.3 percentage points to 18.9%/5.3%, and the net profit margin decreased by 2.8 percentage points year-on-year to 2.3%.
Growth catalysts: Elevating product importance, strong drive for channel expansion.
The snack sector overall presents a pattern of large industry with small companies, with the development of Chinese snacks and channel transformation continuously bringing growth opportunities. In the context of shrinking industry β, it tests snack companies' abilities in creating explosive products and exploring new channels. Currently, three types of companies are core to watch: first, those that create core explosive products on the product side, capable of accelerating growth through product curve expansion, such as the explosive demand for konjac driving the growth of Wei Long and Yan Jin. Second, companies in the rapid channel expansion phase, where dividends are concentrated, such as YouYou opening opportunities in Sam's Club, hypermarkets, and e-commerce channels. Third, companies that continuously innovate and open up growth potential.
Investment recommendations: Two main lines of product and channel, preferentially select growth stocks.
Along the two main lines of product and channel, identify companies that can successfully realize growth momentum this year: 1) Wei Long Delicious (09985): The explosive demand for konjac allows the leading company to fully share the category's H2 dividend profits, with ample elasticity under a low base. 2) Yan Jin Pu Zi (002847.SZ): The large single product of konjac drives growth, confirming the brand incubation capability, with multiple growth drivers for the multi-category company in the future. 3) YouYou Foods (603697.SH): Concentrated release of channel dividends, with a strong and clear growth momentum path 4) Wanchen Group (300972.SZ): The bulk snack store continues its high growth trend through store expansion, with an increase in net profit margin and the ongoing recovery of minority shareholders' equity. The subsequent development of new store formats is expected to open up new growth space. At the same time, pay close attention to the mapping of the Mingming Hen Mang sector, the successful turnaround of the main business of HAOXIANGNI, as well as the undervalued and transformative growth potential of Three Squirrels, Ganyuan Food, JINZAI FOOD, and Qiaqia Food.
Risk Warning: Product promotion may fall short of expectations, significant increases in raw material costs, and intensified industry competition
