National policies stimulate domestic demand, and emerging consumer stocks rise.

The situation of the tariff war is rapidly changing, once causing severe fluctuations in the market, but some sectors have performed brilliantly. As promoting domestic demand becomes an important measure to boost the economy, and with a lower correlation to foreign trade, the Hong Kong domestic demand consumption sector has strengthened, not only leading to the emergence of new consumer stocks with a market cap exceeding one hundred billion, but also sparking a "treasure hunt" craze in the consumption sector.

Since the beginning of this year, a series of policies to expand domestic demand and promote consumption have been successively implemented in the mainland. The Central Economic Work Conference convened in March 2025 listed "a strong boost to consumption, improving investment efficiency, and comprehensively expanding domestic demand" as the primary task in economic work for the year.

In the same month, the General Office of the Central Committee and the General Office of the State Council issued the "Special Action Plan to Boost Consumption," proposing measures such as promoting reasonable growth of wage income, scientifically raising the minimum wage standard, increasing support for childbirth and child-rearing, researching the establishment of a childcare subsidy system, and strengthening support for the renewal of consumption goods, all of which are expected to bring significant bullish effects to domestic demand stocks. Recently, many regions in the mainland have successively introduced a new round of stimulus policies, indicating that a package of domestic demand expansion policies is continuously being promoted.

The transition in the consumption sector is generating new consumer blue-chip stocks.

The domestic consumption sector is worth paying attention to as a key aspect of national policy. However, in recent years, consumption trends have quickly changed, and there has been a jiegoutiaozheng in the sub-sectors: traditional consumer segments such as liquor and dairy have seen a decline in popularity, and the "king" status of consumer stocks has subtly changed, opening up a new narrative for growth. In fact, this year, POP MART (09992.HK) $POP MART (09992.HK)$and Lao Pu Gold (06181.HK) $LAOPU GOLD (06181.HK)$have emerged as the new generation of leading consumer stocks, and the popularity of new-style consumer stocks continues to expand, extending to Mi Xue Group (02097.HK), Wei Long Delicious (09985.HK) $WL DELICIOUS (09985.HK)$and other emerging symbols.

The rise of the internet celebrity economy combined with star-driven sales has created a successful paradigm for new consumption, giving birth to many popular products and IPs, with Labubu being a typical example. Last year, in a generally pressured consumer market, two types of stocks demonstrated resilience and maintained high growth: one type is rare Luxury Goods and high-barrier personalized brands such as POP MART and Lao Pu Gold; the other type includes cost-effective public consumer brands with affordable alternatives and leading market shares like Wei Long. Compared to the distinct brand positioning of POP MART and Lao Pu Gold, Wei Long, though more "low-key", has shown impressive performances in recent Earnings Reports, with its stock price repeatedly hitting new highs this year, deserving of close attention.

The leading multi-category snack food has been established.

In 2024, Wei Long's revenue is projected to be 6.266 billion yuan (the same below), a year-on-year increase of 28.6%; net profit is 1.069 billion yuan, a year-on-year increase of 21.4%, again delivering an impressive report card.

Since 2023, Wei Long has established a multi-category product strategy, continuously creating new growth points through its diversified development path, now showcasing even more foresight. The success of konjac products reflects Wei Long's strengths, emphasizing that it is "more than just spicy" as part of its brand message.

According to CICC's Research Reports, Weilang's profit performance in 2024 is expected to surpass market expectations, mainly due to accelerated revenue growth and increased production capacity utilization in the second half of the year. With the surge in consumer demand for low-calorie, high dietary fiber products, Weilang announced an investment of 1 billion RMB to build a production base in Nanning, Guangxi Zhuang Autonomous Region, which is expected to further expand capacity.

For the snack fast-moving consumer goods market, consumer tastes are constantly changing. Snack food categories must not only continuously iterate but also capture consumer mindset to establish a foothold. It is known that, in the past, many companies in the food and snack sectors have made their mark with a single product, but many have struggled to sustain it. In contrast, Weilang has created a phenomenon with its spicy strips, maintaining stable growth even after over twenty years in the market, and consolidating its first-mover advantage through continuous research and development, launching vegetable products like konjac strips as a second growth curve.

With its positioning as a 'category creator,' Weilang has built a strong brand moat in consumers' minds, with konjac strips now becoming Weilang's second key product to exceed 1 billion yuan in annual sales. Leveraging deep consumer market insights and its own R&D capabilities, Weilang solidifies its leadership position in the spicy snack food Industry. In 2024, it continues to innovate, launching products like Little Witch konjac spicy tripe and Little Witch konjac dried snacks, as well as Weilang's finger-licking grilled meat flavor spicy strips, accelerating the expansion of its product matrix to meet consumers' increasingly segmented taste needs.

Breaking through offline channel construction and expanding younger demographics.

In 2024, Weilang's offline and online channel revenues grew by 27.5% and 38.1% year-on-year, respectively, creating a strong complement and reflecting the gradual completion of channel adjustments. The multi-channel expansion drives sustained growth. In addition to growth in content e-commerce, chain KA/CVS, and bulk snack channels, new channels such as Douyin, Xiaohongshu, and WeChat stores are actively explored. The offline channels cover all major bulk snack systems and membership supermarkets. As new channels are expected to continue contributing to growth momentum, it is anticipated that the proportion of e-commerce channels and bulk snacks has further room for enhancement, strengthening the efficacy of multi-channel construction.

HTSC's earlier Research Reports first covered Weilang, stating that the company has successfully established a national spicy strip brand image with clear competitive advantages, and as a pioneer in the konjac sector, is expected to be among the first to enjoy the benefits of rapid category expansion. Simultaneously, compared to the long-standing characteristics of China's snack industry, which often features many categories and weak brands, spicy snacks tend to be more addictive and have higher repurchase rates, effectively extending the product lifecycle. Weilang's brand strength constitutes the core of its competitiveness and possesses the determination and capability to innovate new categories, focusing on building key products and embracing new channels, which may help overcome two major pain points in the snack industry: short product lifecycles and variable channel structures. HTSC gives Weilang a Buy rating with a Target Price of 19.96 yuan.

On May 8, Weilang Delicious announced its placement to raise approximately 1.1776 billion yuan, with expected net proceeds of approximately 1.167 billion yuan, primarily (about 50%) used to expand and upgrade the company's production facilities and supply chain system to increase its capacity. Earlier, on the 22nd of last month, the company voluntarily announced its plan to invest in a new casual food production base in Nanning, Guangxi Zhuang Autonomous Region, with fixed asset investment of about 1 billion yuan (RMB, the same below). This move aligns with its long-term Global Strategy to continuously support business development and expansion through the establishment of new bases. It is worth noting that the stock has continued to trend upwards after the announcement of the new base.

Consumer stocks stand out in terms of capital.

China International Capital Corporation immediately released a Research Report commentary following its placement announcement, indicating that the placement will enhance the overall financial strength and market competitiveness of Weidong Delicious. Additionally, it could further enrich the Shareholder base and strengthen the liquidity of the shares; it is expected that by 2025, the company will maintain a rapid growth trend in revenue through all-channel expansion and product specification, flavor, and category expansion. Therefore, the firm maintains its rating of outperformance relative to the Industry and keeps its Target Price at 17.5 yuan.

Lao Pu Gold announced on May 8 the placement of new H shares to raise approximately 2.715 billion HKD, with a net amount of about 2.698 billion HKD. Following the full circulation of H shares completed on April 3, the proportion of H shares surged from 56.29% to 80.28%, showing significant results from capital operations. As of May 23, its shares closed at 826.5 HKD, with a premium of 31.2% above the placement price, reflecting strong market recognition of equity optimization and brand potential amid fluctuations in the Hong Kong stock market.

It is worth noting that the scarcity of the snack food sector in Hong Kong stocks has become evident, as Weidong's stock price has skyrocketed over 1.24 times since the beginning of the year. Despite the rising valuations, it still remains undervalued compared to similar new consumption stocks, coupled with strong revenue growth momentum and the overseas capital layout still being a blue ocean. It is no wonder that its stock price is seen as having the potential for new highs.

Author: Philip

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