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Public company info - Want Want China Holdings Ltd. , 00151.HK

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Want Want China Holdings Ltd., 00151.HK - Company Profile
Chairman TSAI Eng-Meng
Share Issued (share) 4,294,967,295
Par Currency U.S. Dollar
Par Value 0.02
Industry Diversified Food & Beverage
Corporate Profile Business Summary: The Group is principally engaged in the manufacturing and distribution of food and beverages. The Group’s activities are primarily conducted in the People’s Republic of China (“the PRC”), Taiwan, Japan, Hong Kong and Singapore, and its products are also sold to the United States of America, Canada, countries in South-East Asia and Europe. Performance for the year: The Group achieved a total revenue of RMB19,710.1 million in 2016, representing a decrease of 7.9% as compared with that of 2015. Benefiting from the significant decrease in the cost of key raw materials, the Group’s gross profit margin reached 47.8% in 2016, representing an increase of 3.9 percentage points as compared with that of 2015, and its gross profit increased by 0.4% from 2015 to RMB9,424.2 million. Business Summary: SUMMARY According to the data released by the National Bureau of Statistics of China on 20 January 2017, China’s gross domestic product (“GDP”) grew by 6.7% in 2016 over that of 2015, showing an increasing pace of economic growth slow down and indicating the economy is still in a period of deep adjustment. With the increasingly collaborative sharing of technologies, information and resources around the world, consumer demand has become differentiated and personalized, and the operating environment faced by enterprises has become increasingly complex and volatile. In response to this “new” China economic growth rate and the rapidly changing market environment, the Group continues to pursue product perfection from packaging to content. In addition, sales channels are further refined so that the Group could launch different marketing policies for different target customer groups, thus catering for the needs and preferences of individual consumers. Multi-brand Strategy: Consumers from different regions, with different ages and varied cousumption patterns have different preferences. Accordingly, the Group strengthened the operation of various brands, such as “Yappy”, “Aiyo”, “Baby Mum-Mum”, “Natori”, “Mr. Hot”, etc., such that each brand has its target consumers and products. The multi-brand strategy not only satisfies a wider demand of the Group’s consumers, but also improves the utilization rate of the Group’s production capacity (by leveraging existing resources to produce products under these brands without incurring additional investment). The Group plans to source new distributors to develop new points of sales for products under these brands so as to enhance Want Want products’ shelf presence and availability. In the second half of 2016, the Group launched 2 new dairy and beverage products, aiming at diversifying the portfolio of Want Want’s dairy products and beverages and at satisfying the Group’s consumers with new and more diversified choices of products. Differentiated Channel Operation: In 2016, the Group differentiated its products sold among various channels. Some brands are channel specific, e.g. “Baby Mum-Mum” is exclusive for maternity channel, the “Mr. Hot” series is exclusive for e-commerce channel; even for star products like “Hot-Kid milk”, the Group also strived for differentiation in packaging and specifications among various channels. This measure has effectively prevented possible conflicts among channels. Differentiated Channel Operation: In 2016, the Group achieved breakthroughs in re-evaluating the Group’s modernchannel. Taking into account of the buying habits of consumers in modernchannel, the Group introduced the “Hot-Kid milk” pack suitable for familyconsumption. It not only helped to offer a more complete range of packingspecifications of “Hot-Kid milk”, but also resulted in a high single-digit revenuegrowth of dairy products and beverages in modern channel. At the sametime, the Group also attached importance to the operation of new emergingchannels such as e-commerce channel, maternity channel, etc. In 2016, it actively used newly developed live streaming to interact withconsumers and attempted to collaborate with owners/licensors of well-knownintellectual property rights in product design and marketing. In addition,consumer activities were continuously carried out on social platforms such asWeChat and Weibo through the Hot-Kid Club (its number of fans has reachedaround 10 million so far) in order to let the Want Want’s brands and productsreach the main younger generation consumers effectively, as well as vitalizingthe brands. Sales through e-commerce and maternity channels, in aggregateposted a double-digit growth in value term in 2016 over that of 2015. Centralized and Simplified Marketing Policy: In 2016, building on the initiatives taken in 2015, the Group continued tostreamline the distributor policy by simplifying the key performance indicatorsand concentrated on certain selected key indicators for implementation inorder to maintain distributors’ loyalty to the Group amid the weak marketconditions. The Group also continued to look for qualified distributor partners willingfor collaboration, and provided them with certain marketing resources andsupport so that Want Want’s products could be delivered and displayed onthe shelves at the points of sales more expediently. Meanwhile, the Group havealso paid great attention to the inventory management of the Group’s distributors toensure that the stock age of the Group’s products would remain highly competitive inthe channels and at the points of sales and consumers could always enjoy thefine taste of Want Want products. Centralized and Simplified Marketing Policy: The Group achieved a total revenue of RMB19,710.1 million in 2016, representing a decrease of 7.9% as compared with that of 2015. In terms of the revenue attributable to the three key product segments, rice crackers and snack foods segments, in aggregate, accounted for 52.5% of the Group’s revenue whilst that from the dairy products and beverages segment accounted for 47.2%. Benefiting from the fall in the costs of key raw materials such as whole milk powder and packaging materials, and energy cost, the Group’s gross profit margin for 2016 reached 47.8%, representing an increase of 3.9 percentage points over that of the year 2015. The Group’s distribution costs and administrative expenses for 2016 decreased by 4.4% over the year 2015, due mainly to a decrease in the labour costs of sales force as a result of the adjustment to the organization structure. Benefiting from the increase in gross profit margin and good control over costs, the Group’s operating profit for 2016 was up 5.8% to RMB4,811.2 million as compared with that of 2015, with the operating profit margin increased by 3.1 percentage points to 24.4%. The Group’s income tax rate for 2016 was 28.2%, representing a decrease of1.4 percentage points as compared with that of 2015. In the long term, incometax rate of the Group is expected to be between 27% and 28%. As a result, theprofit attributable to equity holders of the Company for 2016 was RMB3,519.2million, representing an increase of 4.0% over that of the year 2015. In 2017, the Group will continue its multi-brand strategy and the diversificationof dairy products and beverages. In the meantime, the Group will further extend thedistribution network under the Group’s “Delivering Want Want Products to VillagesProject”. The Group plan to invest additional manpower and resources at the pointsof sales for the Group’s “key products” so as to strengthen the services of WantWant’s brands at the points of sales. As for the products with growth potential,after integrating the product with its marketing policy, we will develop newcustomers in each regional market such that Want Want products canpenetrate further into the points of sales. Lastly, for the modern channel,we will invest additional in-store promoters in order to enhance the Group’s productvisibility and promote sales of Want Want products. In addition, through theengagement of in-store promoters and adoption of a more flexible marketingstrategy, it is hoped that the market share of Want Want products in themodern channels would be further increased. Prospects: The Group believe that China’s food industry landscape will see a structural reform in the coming two to three years. “Competition leads to progress” is what we have learnt from the history and I believe there will be plenty of golden opportunities amid all the difficulties and challenges, which are only for someone who is well-prepared in advance. The Group require all Want Want management to be accountable and responsible for their work, because The Group bear the dreams of all Want Want staff and the hope of over 50,000 families.

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