Weilong Delicious Global Holdings Ltd 2025 Annual Report – Key Financial and Strategic Highlights for Investors

1. Financial Performance Highlights

• Significant Profit Growth: The Group’s net profit surged by 33.6% to RMB 1,427.3 million in 2025, up from RMB 1,068.1 million in 2024, demonstrating robust earnings momentum.
• Improved Margins:
  • Operating Profit Margin climbed to 25.7% from 22.4% (+3.3pp).
  • Net Profit Margin increased to 19.8% from 17.0% (+2.8pp).
  • Return on Equity (ROE) rose sharply to 21.4% (from 18.2%).
• Strong Cash Position: Net cash flow ratio remained solid at 1.0, though slightly down from 1.2 last year, reflecting healthy operating cash generation.
• Gearing and Leverage:
  • Gearing Ratio increased significantly to 30.1% (from 6.5%), indicating higher leverage, which may warrant attention from shareholders as it could imply greater risk or more aggressive expansion.
  • Liability-to-asset ratio also rose to 35.6% (from 26.6%).
• Inventory Turnover: Inventory turnover days increased to 85.8 days (from 72.9 days), potentially signaling a buildup in inventory levels, which could impact working capital efficiency.
• Receivables and Payables:
  • Trade receivables turnover days: 3.6 days (up from 3.0 days).
  • Trade payables turnover days: 23.4 days (up from 21.2 days).

2. Dividend Policy and Shareholder Returns

• Proposed Final Dividend: The Board will propose a final cash dividend of RMB 0.17 per share (totaling approx. RMB 413.3 million, inclusive of tax) at the upcoming AGM. This represents about 29% of 2025 net profit.
• Total Dividend Payout: Including the interim dividend, total payout for 2025 is RMB 850.9 million, equating to approximately 60% of annual net profit—a strong shareholder return, which is likely to be share price positive if approved and sustained.
• Dividend Policy: The Group targets a payout of no less than 25% of distributable profits annually (barring restrictions). However, actual payouts may fluctuate based on results, financial position, and capital requirements. Dividends are subject to shareholder approval and available reserves.

3. Capital Structure, Investments, and Use of Proceeds

• New Share Issuance: In May 2025, Weilong issued 80 million new shares at HK\$14.72 per share, raising net proceeds of approx. RMB 1,075.8 million for expansion, sales network, brand building, and general corporate purposes.
• Planned Capital Expenditure: As of year-end, capital commitments for property, plant, and equipment stood at RMB 160.7 million. The Group is investing in a new snack food production base in Nanning, Guangxi.
• Balance Sheet: The Group’s distributable reserves as of December 31, 2025 were RMB 2,531.2 million (up from RMB 702.9 million in 2024), supporting future dividends and growth investments.
• No Major Acquisitions/Disposals: The Group did not undertake any material acquisitions, disposals, or equity-linked agreements during the year—removing potential dilution risk and reflecting a focus on organic growth.

4. Strategic & Operational Highlights

• Growth Strategy: The Group is committed to expanding its multi-category product strategy, leveraging strong R&D to launch innovative products and strengthen its leading position in the spicy snack sector.
• Brand & Marketing: Significant focus on youth branding, digital engagement (UGC), and social media to build emotional connections with young consumers and drive lifestyle integration.
• Distribution Expansion: Rapid channel expansion into supermarkets, convenience chain stores, e-commerce, and membership warehouse stores, further deepening market reach and diversification.

5. Corporate Governance and Risk Factors

• Adherence to High Standards: The Company achieved full compliance with the Corporate Governance Code, emphasizing Board diligence, strong internal controls, and risk management.
• Risk Focus:
  • Key 2025 risks identified include food safety and market risks, for which robust mitigation plans have been implemented. No significant internal control deficiencies were found during the year.
  • Market risk is notably high due to rapid changes in consumer preferences and the potential for new products to underperform, which could impact future growth and profitability if not well managed.
  • Inventory turnover days increased, which may suggest potential risk in inventory management or slower sales for some products.
• Connected Transactions: The Group paid RMB 33 million (below the annual cap of RMB 106 million) for packaging materials to Luohe Delong Color Printing Development Co., Ltd, a connected party. All such transactions were reviewed and deemed fair by independent directors and auditors.
• No Significant Legal Proceedings: The Group was not involved in any material legal disputes during the year, reducing litigation risk.

6. Shareholding and Public Float

• Controlling Shareholders: As of year-end, Mr. LIU Weiping and Mr. LIU Fuping (via trusts and intermediary entities) collectively controlled approx. 78.33% of the Company’s share capital, maintaining stable control and alignment of management interests.
• Public Float: The Company maintained a public float of at least 17.06% post-IPO, higher than the minimum required by the Hong Kong Stock Exchange.

7. Outlook and Guidance for Investors

• Growth Ambitions: The Company will continue to invest in product innovation, brand building, and channel expansion, aiming to consolidate its leadership in the spicy snack market and capture new consumer trends.
• Capital Deployment: Proceeds from the recent share placement will be deployed over the next two years to support expansion and brand initiatives, with flexibility for changes based on market conditions.
• Dividend Prospects: The large increase in distributable reserves and strong profit growth support the sustainability of attractive dividend payouts, which should be supportive for share price if maintained.

Potential Price-Sensitive Issues for Shareholders

• Dividend Policy and Payout Ratio: The 60% payout ratio for 2025 is substantial and may positively surprise the market, but investors should monitor if this is sustainable with increased leverage and rising capital expenditure.
• Rising Gearing and Liabilities: The sharp increase in gearing ratio and liability-to-asset ratio could be a concern if leverage continues to rise, especially if top-line or margin growth slows.
• Inventory Build-up: The notable increase in inventory turnover days may indicate slower-moving products or aggressive channel stocking, which could affect future cash flows or require write-downs if not managed.
• Market Risk: The Company’s ability to quickly adapt to changing consumer trends, launch successful new products, and manage inventory will be critical for maintaining growth and profitability.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should refer to the full 2025 Annual Report and consult with their own financial advisors before making investment decisions. While care has been taken to ensure accuracy, no warranty is given as to the completeness or reliability of the information provided herein.

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