China Staples: Snacks - Positive Read-Through from Leading Value Retailer; Buy Yankershop and Weilong
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Goldman Sachs sees positive read-through and manageable margin risks for snack brands following an analysis of the leading discount retailer Mingming Group. The investment bank argues that the relationship between discount retailers and snack brands constitutes a healthy strategic partnership rather than a margin squeeze.
Mingming Group reported moderate gross margin growth in 2025, excluding the impact of reduced franchisee support, and expects steady margin improvement in 2026. Notably, the retailer maintains a low priority for developing private-label snack SKUs, as 80% of its categories already offer unique products. Leading snack brands align well with the retailer's vision for a high-quality, experiential shopping environment, contributing over half of all new channel SKUs. Furthermore, the retailer's planned category expansions into hot and cold foods overlap minimally with packaged snacks.
The discount retail channel remains in a rapid expansion phase. Mingming Group plans to open at least 5,000 new stores in 2026, supporting an estimated 39% year-over-year surge in gross merchandise value, driven by 4,800 net new stores and 4% per-store GMV growth.
Goldman Sachs expects covered snack brands to maintain margin resilience. Yankershop is projected to deliver 15% revenue growth and 19% net profit growth in 2026, trading at an attractive 18 times 2026E P/E after a 15% year-to-date share price decline. Weilong is forecast to achieve 13% revenue growth and 12% net profit growth, fueled by new product launches. The bank reiterates Buy ratings on both Yankershop and Weilong.