Want Want China: Earnings miss on soft margins amid transition; dividend payout cut again

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Want Want China: Earnings miss on soft margins amid transition; dividend payout cut again

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Want Want China

Earnings miss on soft margins amid

transition; dividend payout cut again

Reiterate Rating: UNDERPERFORM | PO: 4.00 HKD | Price: 3.39 HKD

Lower profitability visibility; weaker dividend prospects 02 July 2026

Want Want’s (WW) FY26 sales were +3.8% to RMB24.4bn (with sales of rice crackers/ Equity

dairy & beverages/snack foods +0.5%/+1.9%/+10.4%) while NPAT was -11.5% YoY to

RMB3.84bn, falling short of our estimates (RMB4.0bn) mainly due to higher raw material

Key Changescosts and increased spending on channel shift and organizational restructuring. We

accordingly cut our FY27/28E EPS by 5%/7% to reflect lower margin assumptions, and (CNY) Previous Current

lower PO 15% from HK$4.7 to HK$4.0. We reiterate our Underperform rating, based on: Price Obj. HK$4.70 HK$4.00

1) Margin uncertainty. Discount and emerging channels are key growth drivers but 2027E Rev (m) 24,202.4 24,908.0

structurally dilutive to margins (vs. traditional channels), due to lower pricing and higher 2028E Rev (m) 24,600.1 25,355.9

channel investments. Although mgmt. expects milk powder costs to normalize in 6-9 2029E Rev (m) NA 25,753.7

months, we still see ongoing volatility in other inputs (e.g., PET, paper) amid geopolitical 2027E EPS 0.36 0.34

uncertainty. 2) Lower shareholder returns. WW further reduced its payout ratio to 30% 2028E EPS 0.37 0.35

(vs. 70%/40% in FY24/FY25). Continued investment in product innovation and overseas 2029E EPS NA 0.36

expansion implies higher capex, likely capping dividends in the medium term, in our view.

Chen Luo, CFA >>

FY26 results highlights ResearchMerrill LynchAnalyst(Hong Kong)