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Yangtze Business Daily News●Huang Cong, reporter of Yangtze Business Daily

Two years after launching its mass-market snack business, Wanchen Group's performance has entered a period of harvest.

On the evening of July 29, Wanchen Group (300972.SZ) released its 2024 semi-annual performance forecast, showing that the company expects to achieve revenue of 10.8 billion to 11.2 billion yuan in the first half of the year, a year-on-year increase of 387.25% to 405.3%; net profit of 800,000 to 1.2 million yuan, compared with a loss of 5.5732 million yuan in the same period last year.

Among them, Wanchen Group's revenue from mass-market snack business is expected to be 10.5 billion yuan to 11 billion yuan, exceeding the whole of last year, with a year-on-year growth of 438.84% to 464.50%.

Wanchen Group introduced that as of the end of the first half of 2024, the company's cash and cash equivalents were approximately 2.1 billion yuan, which was sufficient to support the development of various businesses.

It is worth mentioning that in March 2024, Wanchen Group issued a fixed increase announcement, raising a total of 200 million yuan, and the issuer Wang Zening is one of the actual controllers of the company. Now, four months have passed, and Wang Zening has made a floating profit of more than 130 million yuan.

Started the snack food business

Wanchen Group was listed on the ChiNext on April 19, 2021. Its initial main business was the research and development, factory cultivation and sales of fresh edible fungi.

In August 2022, Wanchen Group established Nanjing Wanxing and officially started the operation of the mass-market snack chain business in Jiangsu Province and other regions, operating the mass-market snack brand "Lu Xiaochan".

At the end of 2022, Wanchen Group established joint ventures, Nanjing Wanhao Commercial Management Co., Ltd. and Nanjing Wanyou Commercial Management Co., Ltd., and cooperated with the "Haoxianglai" and "Laiyoupin" brand teams to carry out mass-market snack business.

Wanchen Group established a joint venture company, Nanjing Wanchang Commercial Management Co., Ltd. in April 2023, and cooperated with the "Adi Adi" brand team to develop mass-market snack business.

In September 2023, Wanchen Group, which vigorously develops the hypermarket snack store business, changed its original stock abbreviation "Wanchen Biology" to the current "Wanchen Group".

In the same month, Wanchen Group held a press conference on the merger of snack retail brands, announcing that it would merge its Laiyoupin, Haoshanglai, Adi Adi, and Lu Xiaochan. The unified brand after the merger will be "Haoshanglai Brand Snacks."

The 2023 annual report shows that Wanchen Group has formed a product portfolio covering 9 core categories, including water-based beverages, puffed foods, baked pastries, candied chocolate jellies, meat snacks, nuts and roasted seeds and nuts, instant foods, dried fruit preserves, and vegetarian delicacies, which basically covers all subcategories of food and beverages. The company has more than 1,500 SKUs per store, including domestic and international leading brands and local specialty brands in various categories.

However, in 2023, Wanchen Group achieved operating income of 9.294 billion yuan, a year-on-year increase of 1592.03%; net profit loss was 82.9265 million yuan, a year-on-year decrease of -273.72%.

In this regard, Wanchen Group introduced that the company's edible fungi business was affected by factors such as industry competition and changes in market supply and demand, and the gross profit margin declined in this period.

At the same time, Wanchen Group stated that the hypermarket snack business is still in a stage of rapid expansion, and it requires a lot of investment in market development, brand marketing, supply chain optimization, stimulating team enthusiasm and consolidating competitive advantages, so it will take time to fully release profitability.

Snack business revenue exceeds 10.5 billion

After the development in 2022 and 2023, Wanchen Group's mass-market snack business has achieved steady growth with high speed and high quality.

On the evening of July 29, Wanchen Group released its 2024 semi-annual performance forecast, showing that the company expects to achieve revenue of 10.8 billion to 11.2 billion yuan in the first half of the year, a year-on-year increase of 387.25% to 405.3%; net profit of 800,000 to 1.2 million yuan, compared with a loss of 5.5732 million yuan in the same period last year.

As of the end of the reporting period, the number of Wanchen Group stores has increased significantly compared with the same period last year, and the corresponding operating income has increased significantly year-on-year. In the first half of 2024, the company's snack business revenue is expected to be 10.5 billion yuan to 11 billion yuan, exceeding the revenue of the whole of last year, and the reporting period has increased by 438.84% to 464.50% year-on-year (of which, the operating income in the first quarter of 2024 is 4.695 billion yuan, and the second quarter is about 5.8 billion yuan to 6.3 billion yuan).

Wanchen Group introduced that in order to ensure the long-term sustainable development of its business, the company continues to build its own supply chain advantages, warehousing and logistics advantages, brand building capabilities, organizational refinement management advantages, digital empowerment advantages, etc. At the same time, it improves and optimizes the company's long-term incentive mechanism to fully stimulate the subjective initiative of the mass retail business team. With multiple measures, the company's operating efficiency continues to improve and profitability continues to increase.

The announcement shows that in the first half of 2024, after excluding share-based payment expenses, the net profit of Wanchen Group's mass-market snack business is expected to be 270 million yuan to 294 million yuan, and the net profit margin is about 2.57% to 2.67% (among which, the net profit margin in the first quarter of 2024 was 2.50%, and about 2.63% to 2.80% in the second quarter). The net profit margin of the mass-market snack business continued to increase steadily on a month-on-month basis.

At the same time, Wanchen Group stated that due to market factors such as changes in the edible fungi market, changes in supply and demand, and the seasonal price off-season of edible fungi in the second quarter, the sales price of the company's main product, Flammulina velutipes, fell significantly year-on-year, and the edible fungi business suffered a loss in the first half of 2024. In the future, the company will continue to optimize the quality management of edible fungi, strengthen its own brand advantages, and strive to improve the comprehensive competitiveness of edible fungi products by taking multiple measures such as increasing unit yield and product quality and reducing product costs.

Monetary capital of approximately 2.1 billion yuan, an increase of 20 times

Currently, after enduring the period of losses, Wanchen Group's operating data has improved.

In the first quarter of 2024, Wanchen Group's gross profit margin reached 9.77%, an increase from 9.30% for the whole year of 2023.

As of the end of the first quarter of 2024, Wanchen Group's cash and cash equivalents reached 1.705 billion yuan, a year-on-year increase of 717.03%; short-term loans reached 642 million yuan, a year-on-year increase of 164.97%; long-term loans reached 160 million yuan, a year-on-year increase of 33.47%.

In the 2024 semi-annual performance forecast, Wanchen Group introduced that as of the end of this reporting period, the company's cash and cash equivalents were approximately 2.1 billion yuan, which was sufficient to support the development of various businesses.

At the end of the first half of 2023, Wanchen Group's cash and cash equivalents were only 99.3925 million yuan, a year-on-year increase of 20 times in the first half of 2024.

It should be noted that Wanchen Group is continuing to increase its investment in sales expenses.

From 2021 to 2023, Wanchen Group's sales expenses were RMB 2.3747 million, RMB 19.7347 million and RMB 434 million, respectively, year-on-year increases of 2.69%, 731.04% and 2098.37%, respectively.

In the first quarter of 2024, Wanchen Group's sales expenses reached 196 million yuan, a year-on-year increase of 453.98%, slightly higher than the increase in operating income.

In March 2024, Wanchen Group issued a listing announcement for the issuance of A-shares to specific objects in 2023. The total amount of funds raised by the company in this issuance was 200 million yuan. After deducting various issuance expenses of RMB 6.3984 million (tax included), the net amount of funds raised was 194 million yuan.

In this private placement, Wanchen Group plans to use the funds raised for brand marketing network construction and operation service support construction projects. The issuer Wang Zening is one of the company's actual controllers, and the issue price is 11.30 yuan per share.

In the secondary market, Wanchen Group's current share price is hovering around 19 yuan per share. Wang Zening has made a floating profit of over 130 million yuan in the four months since he took charge of the private placement.