UBS: Weilong Delicious Global GCC 2026 Outlook: 2025 Guidance Intact, Product Innovation to Drive 2026 Growth
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UBS maintains a Buy rating on Weilong Delicious Global (9985.HK) with a DCF-based target price of HK$16.50, representing 33.7% upside from the January 12, 2026 closing price of HK$12.34. Management reaffirmed its 2025 guidance: revenue growth exceeding 15% year-over-year, gross margins of 46-48%, and net margins of 18-20%.
Konjac remains the paramount strategic category, commanding a 50-60% market share. New flavors—including sesame paste, porcini mushroom, and chicken claw—are expected to drive incremental sales in 2026. The latiao category faced headwinds in 2025 due to resource reallocation and SKU reductions, but management anticipates a recovery in 2026 through expanded flavor offerings.
Snack discount stores continue serving as the primary growth engine, with their share of total sales projected to climb from 25-30% in 2025 to 30-35% in 2026. Although gross margins are lower in this channel, operating margins remain comparable due to scale efficiencies. Online channels are expected to recover in the second half of 2025 and play a vital role in new product testing during 2026. Instant retail is identified as a meaningful incremental opportunity.
While second-half revenue growth may moderate slightly compared to the first half—owing to softer post-holiday consumption trends and timing of Chinese New Year—pre-holiday distributor advance payments for 2026 have been robust, supported by promotional strategies and gift box expansions.
Key risks include weakening demand, economic slowdowns, heightened competition, and new product failures.