Chinese spicy snacks giant Weilong sees profit surge, enticing investors in a slow economy
- First-half net profit is likely to jump 34 per cent to 39 per cent year on year for earnings of between US$82.8 million and US$85.9 million
Based in Luohe, in central Henan province, Weilong said first-half net profit is likely to jump 34 per cent to 39 per cent year on year for estimated earnings of between 599.1 million yuan (US$82.8 million) and 621.5 million yuan, according to the company’s filing to the Hong Kong stock exchange on Thursday.
That projected profit growth stems from its “omnichannel construction and brand building”, which boosted revenue growth online and offline, according to Weilong. It added that a decline in raw material costs also bolstered its gross profit margin.
“We think that snacks’ lower ticket size and higher frequency of purchase could provide a degree of ‘small happiness’ amid a cold macro environment,” Morgan Stanley analysts wrote in a note on Friday.
The optimistic forecast shows how snacks are portrayed as more resilient, outperforming other products in the consumer staples category, as consumption slows in the world’s second-largest economy.