Principally engaged in the manufacturing, distribution and sales of food and beverages.
The Group's profit attributable to shareholders for the 6 months ended 30-09-2019 amounted to RMB 1.61 billion, an increase of 18.4% compared with previous corresponding period. Basic earnings per share was RMB 0.1299. An interim dividend of USD 0.0064 per share was declared. Turnover amounted to RMB 9.30 billion, an increase of 0.6% over the same period last year, gross profit margin up 4.4% to 48.9%. (Announcement Date: 19 Nov 2019)
Business Review - For the six months ended September 30, 2019
In the first half of 2019FY, revenue from rice crackers segment decreased by 2.1% year-on-year to RMB1,820.6 million. This was due mainly to the Group’s strategic decision to reduce the production volume of the low-margin sub-brand rice-crackers for profitability consideration. Revenue from corebrand rice crackers recorded a year-on-year increase of 3.4%, of which revenue from wholesale channels and revenue from overseas markets both achieved a mid-to-high single-digit growth rate and emerging channels such as vending machines, Want Want official online mall, OEM, etc. experienced a rapid growth.
Brand building and IP collaboration created an energetic and youthful image of “Want Want” among consumers. During the period, the hot topics included double colored wet paddy field showing the phrase “Want Want Rice Crackers Got Rice” grown on the black soil of Jiamusi, demonstrated the Group’s quality control process that traced the origin of rice crackers’ ingredients, the optimization and upgrade of products that fulfilled the demands of consumers for healthy and delicious products, the “brown-rice rice crackers” and “seaweed rice crackers” which have gradually become a new driving force for the revenue growth of rice crackers segment.
Alongside with the expansion of channels, sales through wholesale channels continued to maintain a healthy growing trend and rice cracker products also received great acceptance in emerging channels, such as theme stores, vending machines, Want Want official online mall, maternal and child channels, all recorded good repeated purchase rate, which drove the rapid growth in emerging channels for corebrand rice crackers. Meanwhile, sales of maternal and child products under the “Baby Mum-Mum” brand for export have been performed well for over 10 years and have become a major product in babies and toddlers food shelves in Europe and United States, enabling exported rice cracker products to maintain a mid-single-digit revenue growth rate. In the first half of 2019FY, the low sugar and trans-fatty acid free rice crackers, that are rich in dietary fibers and designed for elderlies, provided another choice of healthy snacks for them. Thus, the Group has developed a product range suitable for consumers from 6-monthold infants and youngsters to elderlies. By leveraging on our 36 years of solid experience in factory production management and innovative research and development capability in rice crackers, the orders for OEM have been increasing.
In the second half of 2019FY, with the arrival of the Chinese New Year, the peak sales season for rice cracker products, specialized festival gifts packs will be introduced to the market according to the consumers’ needs and characteristics in different channels, and the festival version of ethnic group limited edition of rice cracker products will bring joyful shopping experience to consumers.
Dairy products and beverages
In the first half of 2019FY, the revenue from dairy products and beverages segment amounted to RMB4,949.9 million, representing a year-on-year growth of 5.5%. The key product, “Hot-Kid Milk”, which accounted for over 90% of the revenue from dairy products and beverages segment, recorded a year-on-year growth of 6.6% during this period. All channels achieved a growth, showing the realization of balanced development of both channels.
In recent years, various successful digital marketing campaigns have created a lively and youthful brand image of Want Want and promoted the emotional interaction with consumers. The commercials “Li Zi Ming has grown up” ( 李子明長大了) reminded consumers of their childhood memories towards Hot- Kid Milk. The co-branded clothing designed based on Hot-Kid Milk cans, which infused the brand with trendy elements, has resulted in an influx of over 700,000 fans to our official flagship store on Tmall platform and the clothing were all sold out within 7 seconds. The packaging design with the images of 56 ethnic groups for Hot-Kid Milk echoed the feelings for ethnicities of consumers and has become hot topic for online search that was searched for over 210 million times.
Benefiting from the operation at retail stores and refined management of channel inventories, together with the lively and diversified online digital marketing activities which boosted the sales at offline physical stores and increased distributors’ confidence in Want Want’s products, revenue of dairy and beverage products derived from the wholesale channels achieved a mid-single digit growth rate. Retail stores were also benefited, which realized the Company’s operating philosophy of “Prosperity for you, for me and for all”.
In addition, the Group focused on the expansion of dairy product portfolio. In the first half of 2019FY, the sugar-free “Hot-Kid Pure Milk” ( 旺仔純牛奶) which is made from 100% raw milk and rich in calcium and milk protein and the “Nuts Milk” ( 堅果牛奶) were ranked top among our products sold in e-commerce channels when they were just put on the market, which not only diversified the Hot-Kid IP images, but also further expanded and upgraded the Hot-Kid product series.
In the first half of 2019FY, revenue of snack foods reached RMB2,508.6 million, representing a decrease of 6.2% as compared with that of the same period in the previous year. This was due mainly to the weak sales of popsicles resulting from the weather conditions which were unfavourable to the popsicles business. The sales of candies recorded a revenue growth rate of 7.5% year-on-year. Revenue growth at a rate of 1.2% was seen in beans, jellies and other category of snack foods segment. The optimization and upgrade of products enriched the product offerings of snack foods in emerging channels. The focus of wholesale channels was on developing the third and fourth tier cities, unleashing the consumption potentials in those areas and expanding our consumer base.
The revenue of candies recorded a high single-digit growth rate while jellies, beans and other category also recorded revenue growth. In particular, core products such as Hot-Kid QQ gummy and jellies both achieved double-digit growth. In recent years, the Group focused on product upgrade and brand building, and providing each type of products with unique attributes catering to the new demands of the consumer market. “Queen Alice”, a new product with unique taste and chewy texture, is of great appeal to young ladies. “Soft Pudding” ( 嫩布丁), a perfect blend of juice and New Zealand milk with smooth and silky texture and exquisite packaging gives consumers the experience of tasting high-end desserts experience anytime and anyplace. “Western Mushroom Mochi Rice Noodles” ( 西式蘑菇麻糬Q米撈麵) and “Spicy Red Swamp Crawfish Aiyo Rice Noodles” ( 麻辣小龍蝦哎呦Q米麵) from the “Aiyo” ( 哎呦) series of non-fried rice noodles, having a distinctive texture and novel eating method, together with fashionable taste, won the 2018-2019 “Best Innovation Award” and “Excellent Innovation Product Award” in the Chinese convenience food industry.
Due to the weather condition such as a “cool summer” and excessive rain, the sales performance of popsicles in the first half of 2019FY was adversely affected. However, the Group focused on investing its resources in high-margin new products and expanding sales channels and has achieved initial results. Products such as “Milky Sip & Slurp” ( 含乳吸吸冰), “Want Want Pocket Jelly” ( 旺旺吸的凍) and “Dongchi” (凍癡) were well received by consumers. In the second half of 2019FY, the Group will further optimize and upgrade the products, launch new hit products, comprehensively launch family-sized products with new packagings in accordance with demands of consumers and invest more resources in the cold beverages channel.
Business Outlook - For the six months ended September 30, 2019
Leveraging on the online traffic and great exposure of the e-commerce platform on “Double 11 (Singles’ Day)” in the second half of 2019FY, the Group promoted its new specialty products in the form of offline immersive experience and new product launch presentation. As the traditional Spring Festival is approaching, the Group will promote its brands with diversified marketing strategies and put on the market festive candies and snack foods that fit the festive atmosphere and new gift packs that fit the giftgiving culture of the Spring Festival. The Group will also increase the number of special displays at the point-of-sale and organize theme activities and fun games to get closer to the consumers and to build the jubilant atmosphere of the Spring Festival.
Brands and products differentiation
Multi-branding is an inevitable development of market segmentation to satisfy the demands of different consumer groups. In the second half of 2019FY, the Group will further expand the types of products under the “Fix Body” brand, a brand that combines nutritional health and diet management and newly launched in the first half of 2019FY. The brand currently has four series including Tasties, Snacks, Meals and Drinks with a total of 23 types of products. Another brand that is specially tailored to the elderly, namely “Prime of Love” (愛至尊) will also be launched. It is designed to provide nutritional supplements and snacks for the elderly to meet the health and dietary needs of the elderly and to enrich their dietary pattern. In addition, within the existing brands and product categories, product optimization and upgrade will be continued by launching milk products with health elements, and drinks and snacks that are unique in terms of their functions and taste.
As the traditional Chinese New Year peak season is coming, we will optimize the operation of wholesale channels and increase the input of resources into the end points-of-sales and for festive special displays and enhance the interaction with consumers through promotional materials and engaging in-store promoters. As for the modern channels, customized products will be developed in the second half of 2019FY through product optimization. In addition, online discussions and sales were generated by the tailored products and “Hot-Kid ball cake” furniture that captured the hearts of all Hot-Kid fans in the “Double 11” Shopping Festival that had just been held for the e-commerce channels. The planning, establishment and further development of emerging channels will also be an important strategy for the Group’s channel development.
Source: Want Want China (00151) Interim Results Announcement