Stronger shareholder-return commitment, lower costs and new-product ramp-up support second-half growth
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Stronger shareholder-return commitment, lower costs and new-product ramp-up support second-half growth
Goldman Sachs reiterates its Buy rating on Weilong Delicious Global Holdings and raises its 12-month target price to HK$9.76, expecting new products, increased konjac share, and efficiency gains to drive sequential acceleration in 2H26 revenue and net profit growth.
- The company had net cash of RMB5.4 billion at the end of 1H26, with strong free cash flow supporting continued dividends and buybacks.
- Goldman Sachs expects 2H26 revenue and net profit to grow 12% and 10% year on year, respectively, mainly driven by new-product sales and higher konjac snack share.
- PET packaging and soybean oil costs reduced 1H26 margins by approximately 2.5 percentage points, but scaled procurement, in-house production, and improved operating efficiency provided offsets; lower PET and konjac prices could provide subsequent margin tailwinds.
- As of July 2026, offline market share for konjac snacks increased to 61.9%, versus 56.4% in the prior-year period.
- The target price was raised 18.9% from HK$8.21 to HK$9.76, implying 12.2% potential upside.
Report interpretation
Overview
Goldman Sachs attended management's earnings call and roadshow after Weilong Delicious Global Holdings reported 1H26 results. The report believes operating momentum could improve in the second half: new-product launches have achieved initial results, konjac snacks continue to gain share, and better channel execution and operating efficiency could support sequential recovery in revenue, net profit, and margins. Based on clearer shareholder-return commitments, Goldman Sachs reiterates its Buy rating and raises its target price.
Core views
The core investment thesis includes: first, growth in new products and the konjac category will drive sales improvement, with July GMV for new products reaching RMB100 million; second, scaled procurement, in-house production, automation, and higher capacity utilization can partly offset raw-material volatility while benefiting from lower konjac and PET prices; third, net cash and free cash flow provide a foundation for high dividends and buybacks; and fourth, discount retailers, content and social e-commerce, instant retail, and distributor capability building will improve the quality of omnichannel penetration. Seasoned flour products face near-term pressure, but management still plans to drive improvement through packaging, flavor, and channel adjustments.
Analysis framework
The report draws conclusions based on management guidance, operating data, raw-material trends, peer comparisons, and valuation analysis. The target price uses a 14x P/E multiple on expected 2027 EPS, discounted at an 8.6% discount rate; this valuation multiple is in line with the company's average P/E from January 2023 to August 2026.
Methodology notes
Valuing expected earnings per share using a forward P/E multiple and discounting it
Goldman Sachs calculates a 12-month target price of HK$9.76 using 14x expected 2027 P/E and an 8.6% discount rate; the previous methodology used 12x expected 2026 P/E.
Comparing earnings CAGR, dividend yield, and P/E multiples
The report estimates the company's 2025-2027 net profit CAGR at 9%, above adjusted net profit CAGRs of 7% and 3% for Tingyi and UPC, respectively, while also offering comparable shareholder-return characteristics.
Comparison of growth, financial returns, valuation, and composite metrics
This framework uses standardized rankings to measure growth, financial returns, and valuation, and produces a composite percentile metric that provides investment context for a stock relative to the market and industry peers.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Weilong Delicious Global Holdings (9985.HK)Core covered company
- Strengths
- Continued market-share gains in konjac snacks; new products have received initial market validation; ample net cash; relatively high expected dividend yield; potential from omnichannel expansion and improved operating efficiency.
- Weaknesses
- Seasoned flour product revenue fell 9.8% year on year in 1H26; investment in new products and brands may increase selling expenses; traditional shelf-based e-commerce remains at an early stage of development.
- Comparison
- Goldman Sachs expects the company's 2025-2027 net profit CAGR to be 9%, above 7% and 3% for Tingyi and UPC, respectively; its target valuation of 14x expected 2027 P/E is below their target P/E multiples of 15.5x and 15x.
- Risks
- Intensifying competition, channel-development expenses exceeding expectations, weaker-than-expected expansion in channels such as discount retail and community stores, and unfavorable raw-material cost fluctuations.
Key data
- 12-month target priceHK$9.76Raised 18.9% from HK$8.21.
- Current priceHK$8.71Price shown in the report.
- Potential upside12.2%Relative to the current price shown in the report.
- 1H26 net cashRMB5.4 billionManagement stated that ample cash and free cash flow can support dividends and buybacks.
- Expected 2H26 revenue and net profit growth12% / 10%Goldman Sachs expects year-on-year growth to accelerate sequentially.
- July new-product GMVRMB100 millionTwo new konjac products ranked No. 1 and No. 2 on Mashangying's national new-product ranking.
- Offline market share of konjac snacks61.9%As of July 2026, versus 56.4% in the prior-year period.
- Expected 2026 dividend yield7.1%Goldman Sachs forecast.
- Expected 2027 P/E10.8xGoldman Sachs forecast.
Impact & implications
If new products continue to scale up, konjac-category penetration rises, and channel-efficiency improvements materialize, the company's earnings growth may accelerate in the second half. Easing raw-material prices, automation, and higher capacity utilization will strengthen margin resilience; meanwhile, continued dividends and buybacks should enhance the stock's appeal to income-oriented investors. On valuation, the report believes the company has stronger earnings-growth prospects than certain high-dividend food peers.
Risks
- Industry competition exceeding expectations could affect market share, product pricing, and marketing expenditure.
- Excessive channel-development expenses could compress near-term margins.
- Slower-than-expected coverage expansion among discount retailers, convenience stores, and small stores could weigh on revenue growth.
- Rising or volatile PET packaging, soybean oil, and other raw-material costs could pressure gross margin.
- New-product promotion and regional testing may fail to convert into sustained repeat purchases, affecting growth expectations.
- Overseas expansion remains in a gradual development phase, and localization and channel building may progress more slowly than expected.
What to watch
- Whether monthly sales and net profit growth in 2H26 improve sequentially as expected.
- GMV, repeat-purchase performance, and changes in offline market share for new konjac products.
- Trends in PET, soybean oil, and konjac raw-material prices, and the extent to which efficiency improvements offset their impact on gross margin.
- The actual pace of dividend and share-buyback execution and delivery on shareholder-return commitments.
- Expansion progress across discount retailers, distributors, content e-commerce, and instant retail channels.
- Revenue recovery, product innovation, and channel-adjustment progress for seasoned flour products.