Want Want: A Snack Giant with Growth Potential

Want Want is one of the leading food and beverage companies in Greater China and a household name across multiple generations. Best known for its rice crackers, dairy beverages, snack foods, and confectionery, the company combines strong brand recognition with a vertically integrated business model that spans product development, manufacturing, and nationwide distribution. Through continuous product innovation, expanding sales channels, and a growing international presence, Want Want aims to strengthen its market leadership while creating long term growth. The question remains: Does this consumer staples leader deserve a spot in your portfolio?

This is not a financial advice. I am not a financial advisor and I only do these post in order to do my own analysis and elaborate about my decisions, especially for my copiers and followers. If you consider investing in any of the ideas I present, you should do your own research or contact a professional financial advisor, as all investing comes with a risk of losing money. You are also more than welcome to copy me. 

For full disclosure, I should mention that I do not own any shares in Want Want at the time of writing this analysis. If you would like to copy or view my portfolio, you can find instructions on how to do so here. If you want to purchase shares or fractional shares of Want Want, you can do so through eToro. eToro is a highly user-friendly platform that allows you to get started on investing with as little as $50.

The Business

Want Want China Holdings is one of the leading food and beverage companies in Greater China, with roots dating back to 1962 when it was founded in Taiwan as a producer of canned agricultural products for export. The company transformed its business in the 1980s through a partnership with Japanese rice cracker producer Iwatsuka Confectionery, which led to the creation of the Want Want brand. After entering mainland China in 1989 and establishing its first manufacturing operations there in 1992, Want Want gradually evolved from a single product company into a diversified food and beverage manufacturer. Today, it focuses on the production, distribution, and sale of rice crackers, dairy products and beverages, snack foods, and other specialty products. While the company remains best known for its iconic rice crackers, it has expanded into a broad range of products that include flavored milk, yogurt drinks, herbal teas, candies, jellies, potato snacks, baby food, functional nutrition products, and snacks tailored to different consumer groups. Through brands such as Baby Mum-Mum, Mr. Bond, Fix XBody, Mr. Hot, Got Rice, Prime of Love, and Want Power, the company serves consumers ranging from infants and children to young adults and older consumers. Dairy products and beverages account for approximately 51% of revenue, while rice crackers and snack foods together contribute around 49%, providing a well-balanced business mix across multiple product categories. One of Want Want’s greatest strengths is its extensive manufacturing and distribution infrastructure. As of fiscal year 2026, the company operated 34 production bases and 88 factories across mainland China, supported by 418 sales offices and more than 10.000 distributors. This nationwide network enables Want Want to supply products efficiently across both major cities and lower tier markets, giving it one of the broadest distribution footprints in the Chinese packaged food industry. The company complements its traditional distributor network with direct relationships with supermarkets, convenience stores, wholesalers, and rapidly growing e-commerce platforms, allowing it to reach consumers through virtually every major sales channel. Beyond China, Want Want exports products to North America, East Asia, Southeast Asia, and Europe, while its new manufacturing facility in Vietnam represents the first step in building a larger international production platform. Despite operating in the highly competitive consumer staples industry, Want Want consistently generates attractive profitability, with gross margins of 45,1% in rice crackers, 47,1% in dairy products and beverages, and 45,8% in snack foods during fiscal year 2026. These margins reflect both the strength of its brands and the efficiency of its large scale manufacturing operations. The company continues to invest in operational excellence through sustainability initiatives, zero carbon factories, and waste reduction programs, while also expanding its portfolio through new product launches that reflect changing consumer preferences. At the same time, management has streamlined product categories and reorganized the business into dedicated product line units to improve execution and accelerate innovation. Its long term strategy, referred to internally as "Conquering Cities and Winning the World," focuses on leveraging its existing strengths in China while gradually building Want Want into a more global consumer brand. The company’s competitive moat is built primarily on its powerful brand portfolio, unmatched distribution network, manufacturing scale, and deep understanding of Chinese consumers. The Want Want brand is one of the most recognizable food brands in Greater China and has been built over more than four decades through consistent quality, extensive advertising, and products that have become part of everyday life for several generations of consumers. Many of its products carry strong nostalgic value, creating emotional connections that strengthen customer loyalty and make consumers less likely to switch to competing brands. This brand recognition gives Want Want meaningful pricing power while making it easier to introduce new products under trusted brand names. The company's enormous distribution network provides another significant competitive advantage. With hundreds of sales offices, more than 10.000 distributors, and relationships that extend into smaller cities and rural regions, Want Want can reach consumers in areas where many competitors have far weaker market access. Building a comparable nationwide distribution network would require decades of investment, making this an important barrier to entry. Manufacturing scale further reinforces the moat. Operating dozens of production bases and 88 factories allows Want Want to produce large volumes efficiently while maintaining consistent product quality and benefiting from economies of scale in procurement, production, logistics, and marketing. This operational efficiency supports attractive margins despite operating in categories that are often highly competitive. Finally, Want Want benefits from its ability to continuously adapt its product portfolio to changing consumer preferences while leveraging its established brands and distribution network. By offering products that target different age groups, lifestyles, and health trends, the company reduces its dependence on any single product category and remains relevant as consumer tastes evolve. Because new products can immediately leverage the company's existing manufacturing footprint, distribution infrastructure, and brand recognition, Want Want can scale successful innovations much faster than smaller competitors. The combination of trusted brands, nationwide distribution, manufacturing scale, operational efficiency, and deep consumer insight creates a durable competitive position that has enabled Want Want to remain one of the dominant packaged food companies in Greater China for decades.

Management

Tsai Eng-meng serves as the Chairman and CEO of Want Want. He assumed leadership of the family business at the age of 19 following the death of his father, Jonathan Shuai Qiang Ng, who founded the company in 1962. Since then, Tsai Eng-meng has transformed Want Want from a Taiwanese producer of canned agricultural products into one of the largest food and beverage companies in Greater China. Under his leadership, the company expanded from its original focus on rice crackers into a diversified portfolio of dairy beverages, snack foods, and other packaged food products while establishing one of the most extensive manufacturing and distribution networks in the Chinese consumer staples industry. One of the defining achievements of Tsai Eng-meng's tenure has been his early recognition of mainland China's long term growth potential. At a time when many Taiwanese businesses were still cautious about investing across the Taiwan Strait, Tsai Eng-meng aggressively expanded Want Want into mainland China. The company established its first manufacturing operations there in 1992 and has since built a nationwide network that today includes 34 production bases, 88 factories, more than 400 sales offices, and over 10.000 distributors. This early commitment gave Want Want a significant first mover advantage and helped establish the brand as a household name across multiple generations of Chinese consumers. Tsai Eng-meng has built his leadership philosophy around long term thinking, disciplined execution, and continuous innovation. Rather than relying on a small number of flagship products, he has encouraged the company to develop a broad portfolio of products targeting different age groups, consumption occasions, and evolving consumer preferences. At the same time, he has emphasized preserving the company's strong brand identity and adapting products to local tastes. One of his frequently quoted beliefs is, "No matter how difficult the situation is, there are always opportunities in the market," reflecting his conviction that periods of uncertainty create opportunities for companies that remain disciplined and willing to invest for the future. Under Tsai Eng-meng's leadership, Want Want has also invested heavily in manufacturing efficiency, product innovation, sustainability, and international expansion. The company has modernized its production facilities, expanded into overseas markets, and established its first manufacturing base outside China in Vietnam as part of its ambition to become a more global food and beverage company. At the same time, management has streamlined the organization's product categories and strengthened its multi brand strategy to improve execution and better serve different consumer segments. Beyond his operational achievements, Tsai Eng-meng has built a reputation as a long term owner operator with a strong focus on brand equity and disciplined capital allocation. His leadership has consistently emphasized investing in manufacturing capacity, distribution infrastructure, and brand building rather than pursuing short term financial results. These investments have enabled Want Want to generate attractive margins while maintaining one of the broadest distribution networks in the Chinese food industry. Given his decades of experience, entrepreneurial mindset, and long term approach to value creation, Tsai Eng-meng appears well suited to continue leading Want Want through its next stage of development. His ability to recognize structural growth opportunities early, build enduring consumer brands, and scale operations across one of the world's most competitive consumer markets has been central to Want Want's success. As the company continues expanding internationally while strengthening its leadership position in China, Tsai Eng-meng's strategic vision and deep understanding of consumer behavior remain important competitive advantages.

The Numbers

The first number we will look into is the return on invested capital, also known as ROIC. We want to see a 10-year history, with all numbers exceeding 10% in each year. The first number we will look into is the return on invested capital, also known as ROIC. We want to see a 10 year history, with all numbers exceeding 10% in each year. Unfortunately, I do not have a separate figure for fiscal year 2017, as Want Want did not publish a standalone annual report for that year. However, the available figures show that Want Want has generated ROIC above 14% in every year since fiscal 2018, which is an excellent and remarkably consistent result. ROIC increased from 14,5% in fiscal 2018 to a record 18,6% in fiscal 2024 and remained close to that level at 18,5% in fiscal 2025 before declining to 16,0% in fiscal 2026. Several factors help explain why Want Want has been able to earn such high returns for many years. First, the company enjoys high profit margins across its main product categories. Rice crackers, dairy products and beverages, and snack foods all generated gross margins of around 45% or more in fiscal 2026. This is largely because Want Want owns some of the most recognized food brands in Greater China. Consumers trust the brand, buy its products repeatedly, and are often willing to pay a little more than they would for less established alternatives. Second, Want Want has spent decades building its manufacturing facilities and nationwide distribution network. Today, the company has 88 factories, 418 sales offices, and more than 10.000 distributors. Because this network is already in place, Want Want can often sell more products without needing to spend large amounts of money expanding its operations. This allows earnings to grow faster than the amount of money invested in the business. Third, the company has historically been careful with its investments. It has very little long term debt, has avoided large acquisitions, and focuses on steadily expanding its existing brands instead of making expensive bets on new businesses. This disciplined approach has helped Want Want generate strong returns year after year. The increase in ROIC during fiscal 2024 and fiscal 2025 was mainly driven by stronger profitability. The prices of several important raw materials declined, making it cheaper to produce the company's products, while the company did not need to make many large new investments. As a result, earnings increased faster than the amount of money invested in the business, pushing ROIC to record levels. The decline to 16.0% in fiscal 2026 was mainly caused by higher costs and increased spending. Revenue still grew, but earnings declined because the prices of important ingredients such as whole milk powder and palm oil increased significantly. At the same time, Want Want spent much more on advertising, product launches, transportation, and hiring employees to support its new business structure. The company also invested more in factories and equipment than it had the year before. Because Want Want earned less money while investing more in the business, ROIC naturally declined. Looking ahead, I believe Want Want should continue generating ROIC comfortably above 10% because the qualities that have supported high returns for many years remain in place. The company still benefits from strong brands, high margins, an extensive distribution network, and manufacturing facilities that can support future growth without requiring massive new investments. However, I would not expect ROIC to immediately return to the record levels seen in fiscal 2024 and fiscal 2025. The recent decline was partly driven by higher raw material costs and increased investments in marketing, new products, and production capacity. If raw material costs stabilize and these investments begin to generate stronger sales, I believe Want Want has a good opportunity to improve ROIC over time. Given the company's long history of high returns, strong brands, and disciplined management, I believe Want Want is well positioned to continue generating ROIC well above the level I look for in a high quality business.

The next numbers are the book value + dividend. In my old format this was known as the equity growth rate. It was the most important of the four growth rates I used to use in my analyses, which is why I will continue to use it moving forward. As you are used to see the numbers in percentage, I have decided to share both the numbers and the percentage growth year over year. To put it simply, equity is the part of the company that belongs to its shareholders – like the portion of a house you truly own after paying off part of the mortgage. Growing equity over time means the company is becoming more valuable for its owners. So, when we track book value plus dividends, we’re essentially looking at how much value is being built for shareholders year after year. Want Want’s equity has been more volatile than that of many other consumer staples companies. This does not reflect an unstable business but rather the way management allocates capital. The company has consistently generated more cash than it needs to operate and grow, allowing it to pay generous dividends to shareholders. Because dividends reduce the amount of equity that remains in the business, years with high dividend payments can lead to slower growth or even temporary declines in equity despite the company remaining highly profitable. Changes in earnings have also influenced the development of equity. Years with strong earnings, such as fiscal 2022 and fiscal 2026, added significantly to the company's retained profits and helped push equity higher. On the other hand, when earnings weakened, as in fiscal 2023, equity declined because the company retained less profit while continuing to reward shareholders through dividends. Small share buybacks and currency movements have also contributed to changes in equity, but these have generally had a much smaller impact than earnings and dividends. The strong increase in fiscal 2026, when equity reached its highest level ever, was mainly driven by another year of solid profitability. Even though Want Want continued to return a substantial amount of cash to shareholders through dividends, the earnings generated during the year were more than enough to offset those distributions. As a result, the company added more value to the business than it paid out, allowing equity to reach a new record high. Looking ahead, I expect Want Want's equity to continue increasing over the long term, although the path is unlikely to be smooth. Management has a long history of returning a meaningful portion of earnings to shareholders through dividends, so equity will probably continue to fluctuate from year to year depending on earnings and the level of shareholder distributions. However, as long as Want Want continues to grow its earnings over time while maintaining its disciplined approach to capital allocation, I believe equity should continue trending higher over the long run.

Finally, we will analyze the free cash flow. Free cash flow, in short, refers to the cash that a company generates after covering its operating expenses and capital expenditures. I use levered free cash flow margin because I believe that margins provide a better understanding of the numbers. Free cash flow yield refers to the amount of free cash flow per share that a company is expected to generate in relation to its market value per share. Want Want has historically generated strong free cash flow and healthy free cash flow margins. This is mainly because the company combines attractive profit margins with a business model that does not require heavy ongoing investment to support growth. Its well established brands, extensive manufacturing network, and nationwide distribution system have already been built over many years, allowing a large share of the cash generated by the business to remain available after the company has covered its day to day operations and necessary investments. Another important reason is that Want Want sells everyday consumer products that generate recurring demand. Consumers regularly buy products such as rice crackers, dairy beverages, and snack foods, creating a steady stream of cash generation throughout the year. This gives the company the financial flexibility to invest in future growth while continuing to reward shareholders through dividends. Free cash flow has been more volatile than earnings over the past decade because it depends not only on how much money the company earns but also on how much it chooses to invest in the business. The lower free cash flow in fiscal 2025 and fiscal 2026 was mainly the result of two factors. First, profitability declined because the prices of important raw materials, including whole milk powder and palm oil, increased while the company also spent significantly more on advertising, marketing campaigns, transportation, and launching new products. Second, Want Want substantially increased its investments in the business. The company invested heavily in expanding production capacity, upgrading older factories and equipment, establishing a new production base in Taiwan, and improving its supply chain. Although these investments reduced free cash flow in the short term, they are intended to support future growth and strengthen the company's competitive position over the long term. Even after these increased investments, Want Want continued to generate strong free cash flow, demonstrating the cash generating nature of the business. Looking ahead, I believe free cash flow should improve over time, although it will probably continue to fluctuate from year to year. As the recent investments begin contributing to production and sales, and provided raw material costs become more stable, the company should be able to convert a larger share of its earnings into free cash flow again. Because Want Want already has an extensive manufacturing footprint and distribution network, future growth should not require the same level of investment every year. This should support stronger cash generation over the long term. Want Want primarily uses its free cash flow in three ways. First, it reinvests in the business by expanding and upgrading factories, improving production equipment, strengthening its supply chain, developing new products, and supporting marketing initiatives that reinforce its brands. Second, the company returns a significant portion of its cash to shareholders through dividends, which has been a central part of its capital allocation strategy for many years. Finally, Want Want maintains a strong cash position to provide financial flexibility for future investment opportunities and to navigate periods of economic uncertainty. I believe this balanced approach to capital allocation positions the company well to continue creating long term value for shareholders. The free cash flow yield suggests that Want Want is trading at a very attractive valuation and one of its most attractive valuations in more than a decade. However, we will revisit valuation later in the analysis.

Debt

Another important aspect to consider is debt. It is crucial to assess whether a business has a manageable level of debt that can be repaid within three years, calculated by dividing total long term debt by earnings. Upon analyzing Want Want’s financials, it is clear that the company currently has no long term debt, which is something I like to see. In recent years, Want Want has made it a priority to reduce its borrowings, and by fiscal year 2026 it had completely eliminated its long term debt while also reducing its total borrowings. At the same time, the company holds a very large cash position, meaning it has considerably more cash than total debt. This gives Want Want a high degree of financial flexibility. The company can continue investing in new production facilities, product innovation, and international expansion without relying heavily on borrowing. It also provides flexibility to maintain its dividend, pursue attractive investment opportunities, or navigate periods of economic uncertainty from a position of strength.

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Risks

Changing consumer preferences is a risk for Want Want because the company depends on consumers continuing to buy its products in an industry where tastes and preferences constantly evolve. Although Want Want owns some of the most recognizable food and beverage brands in Greater China, consumer loyalty cannot be taken for granted. Younger generations often have different preferences than older consumers and are generally more willing to try new brands, flavors, and product categories. As eating habits continue to evolve, there is a risk that some of Want Want’s traditional products, such as rice crackers and flavored dairy beverages, become less popular over time if they fail to remain relevant. Consumers are also placing greater emphasis on health, nutrition, natural ingredients, lower sugar content, and sustainability when making purchasing decisions. If these trends continue to accelerate, demand for some of Want Want’s traditional snack products could come under pressure unless the company successfully adapts its product portfolio. Competition further increases this risk. Both domestic and international food companies are investing heavily in product innovation, marketing, and healthier alternatives, while new digital first brands are using e commerce and social media to reach consumers more quickly than ever before. These newer companies are often able to identify emerging trends and launch products at a faster pace than larger, more established businesses. If competitors introduce products that better match changing consumer preferences, Want Want could lose market share or be forced to spend more on advertising and promotions to defend its position. While Want Want has responded by expanding its product portfolio with healthier snacks, functional nutrition products, and beverages aimed at different consumer groups, there is no guarantee that these newer products will achieve the same success as its iconic brands. The company must continuously balance preserving the appeal of its long established products with investing in innovation that keeps the brand relevant for future generations. If management fails to strike this balance, Want Want could experience slower sales growth, lower margins, and a gradual erosion of its competitive position.

Geopolitical and economic uncertainty is a risk for Want Want because the company generates the vast majority of its revenue in mainland China while maintaining strong ties to Taiwan, where it was founded. This geographic concentration means that the company is heavily exposed to political developments, government policies, and economic conditions in a relatively small number of markets. Although Want Want has built one of the strongest food and beverage brands in Greater China, it cannot control the broader environment in which it operates. One important challenge is the relationship between mainland China and Taiwan. Political tensions between the two have persisted for many years, and while Want Want has continued to operate successfully, there is always the possibility that tensions could escalate. A deterioration in relations could lead to trade restrictions, changes in regulations, disruptions to transportation or supply chains, or reduced consumer confidence. Even if the company's operations are not directly affected, heightened geopolitical uncertainty could make it more difficult to plan long term investments or weigh on investor sentiment toward companies with significant exposure to the region. Government policies also represent an important source of uncertainty. China's regulatory environment can change quickly, and authorities have broad influence over many industries. Changes to food safety standards, advertising rules, taxation, environmental requirements, or other regulations could increase costs or require Want Want to modify its products or business practices. While these changes often affect the entire industry, they can still put pressure on profitability and require additional investment to remain compliant. Economic conditions are another important consideration. Although many of Want Want's products are relatively affordable, demand is still influenced by consumer confidence and household spending. During periods of slower economic growth, higher unemployment, or weaker consumer sentiment, people may reduce discretionary purchases or choose lower priced alternatives. This could result in slower sales growth, particularly for premium products or new product launches, while increased competition could put additional pressure on margins. Finally, investor sentiment toward China has become more cautious in recent years due to concerns about economic growth, regulatory changes, and geopolitical tensions. Even if Want Want continues to execute well operationally, these broader concerns could weigh on the company's valuation for an extended period. For these reasons, geopolitical developments and the health of the Chinese economy will likely remain among the most important external factors influencing Want Want's long term performance.

Brand reputation is a risk for Want Want because the company's success depends heavily on the trust that consumers have placed in its brands over many decades. Want Want has become one of the most recognizable food and beverage companies in Greater China, and many of its products have been household favorites across multiple generations. This strong brand recognition is one of the company's greatest competitive advantages, but it also means that any damage to its reputation could have a meaningful impact on consumer demand. Unlike many other industries, food and beverage companies rely on consumers believing that their products are safe, high quality, and produced responsibly. If that trust is broken, it can be difficult and time consuming to rebuild. One of the biggest threats to Want Want's reputation would be a product quality or food safety incident. A product recall, contamination issue, or failure to meet food safety standards could quickly attract widespread media attention and reduce consumer confidence in the company's brands. Even if only a small number of products were affected, consumers could lose trust in the broader product portfolio because the Want Want brand appears across many categories. Such an event could lead to lower sales, additional quality control costs, legal liabilities, and increased regulatory scrutiny. Reputation can also be affected by factors beyond product quality. Consumers are paying increasing attention to issues such as ingredient quality, nutritional value, environmental practices, and the way companies treat employees and suppliers. If Want Want were perceived as falling behind consumer expectations in any of these areas, it could weaken the appeal of its brands, particularly among younger consumers who tend to place greater emphasis on corporate responsibility and transparency. Social media further amplifies this risk because negative stories can spread rapidly and reach millions of consumers within a very short period of time. A damaged reputation could also affect Want Want's relationships with retailers, distributors, and business partners. Retailers may choose to give more shelf space to competing brands if consumer demand weakens, while distributors may become more cautious about promoting the company's products. Rebuilding trust would likely require significant investment in product quality, marketing, and communication, while sales and profitability could remain under pressure during the recovery period. For a company whose competitive advantage is built largely on the strength of its brands, protecting its reputation will remain essential to maintaining customer loyalty and creating long term value for shareholders.

Reasons to invest

New products is a reason to invest in Want Want because the company has demonstrated an ability to continuously develop products that reflect changing consumer preferences while creating new sources of growth. This is particularly important in the food and beverage industry, where consumer tastes evolve over time and companies must regularly introduce new products to remain relevant. Rather than relying solely on its iconic brands and best-selling products, Want Want has invested heavily in research and development to refresh its portfolio and expand into new categories. This strategy allows the company to strengthen existing brands while attracting new consumers and increasing spending from existing customers. One of the most encouraging aspects of Want Want's innovation strategy is that it is producing meaningful financial results rather than simply generating publicity. Products launched within the past five years now account for a mid teen percentage of the company's total revenue, demonstrating that new product development has become an important contributor to growth. Management has also stated that it intends to continue increasing investment in research and development, suggesting that innovation will remain a key priority for the business. A major focus of Want Want's product development is adapting to long term consumer trends. The company is introducing products with lower sugar content, higher protein, more dietary fiber, cleaner ingredient lists, and functional benefits such as probiotics. These innovations allow Want Want to participate in the growing demand for healthier foods without abandoning the strong brands that have made the company successful. Instead, management is modernizing existing product categories while also developing entirely new offerings that appeal to changing consumer preferences. Want Want is also expanding its portfolio by creating products for specific consumer groups and consumption occasions. The company has introduced brands such as Baby Mum-Mum for infants and toddlers, Prime of Love for seniors, Want Power for health conscious young professionals, and Fix XBody for consumers with active lifestyles. In beverages, it has successfully launched products such as children's milk, high protein milk, yogurt drinks, fruit and vegetable juices, unsweetened teas, and wellness focused beverages. Many of these products have generated strong sales, with several already reaching meaningful revenue levels, while new beverages have become an increasingly important contributor to growth. Innovation extends beyond developing healthier products. Want Want frequently introduces new flavors, limited edition products, co branded offerings, improved packaging, and products designed for different sales channels and consumption occasions. This allows the company to keep its brands fresh, generate consumer excitement, and encourage repeat purchases. Management also continues to invest in premium products and visually appealing packaging, helping the company attract younger consumers while strengthening its position across multiple price points.

Expanding points of sale is a reason to invest in Want Want because the company is continuously increasing the number and variety of places where consumers can purchase its products. This is important because even the strongest brands cannot grow if they are not readily available where consumers choose to shop. Shopping habits have changed significantly in recent years as consumers increasingly purchase products through e commerce platforms, convenience stores, specialty snack retailers, instant delivery services, and social commerce rather than relying solely on traditional supermarkets and wholesalers. Want Want has recognized these changes and is actively adapting its distribution network to meet consumers wherever they prefer to shop. By expanding across both traditional and emerging sales channels, the company is creating more opportunities to grow sales while strengthening the visibility of its brands. One of the most encouraging developments is the strong growth Want Want is achieving through emerging channels. Sales through e commerce, OEM partnerships, and other newer distribution channels have delivered solid double digit growth and have become one of the company's most important growth drivers. The company has established flagship stores across major online marketplaces while also building a strong presence on social media platforms such as Douyin, Weibo, and WeChat through content driven marketing and live streaming. This allows Want Want to engage directly with consumers, particularly younger generations, while increasing brand awareness and encouraging repeat purchases. The company has also built a membership ecosystem with more than three million members, providing valuable consumer insights and strengthening customer loyalty over time. At the same time, Want Want continues to improve its traditional distribution network rather than abandoning it. The company works closely with wholesalers, supermarkets, convenience stores, specialty snack retailers, and neighborhood stores while tailoring its products to each channel. For example, convenience stores primarily offer single serving products designed for consumption on the go, supermarkets focus on larger family packs and gift boxes, and specialty snack retailers offer a broader assortment of products. By customizing its product mix and merchandising strategy for each type of retailer, Want Want is able to increase product visibility and better match different consumer needs. Management is also expanding into entirely new consumption occasions. The company has increased its presence near schools, e sports venues, billiard halls, and other locations where younger consumers spend time. It is also growing its network of smart vending machines, making its products more accessible in high traffic locations while reducing dependence on traditional retail formats. These initiatives help Want Want reach consumers at the moment they are most likely to make an impulse purchase, particularly for snacks and beverages.

Overseas markets is a reason to invest in Want Want because the company has made steady progress in expanding beyond its core markets, creating an additional source of long term growth. While the vast majority of revenue still comes from mainland China, overseas operations have gained momentum after many years of investment. This is important because it reduces the company's reliance on a single market while allowing it to introduce its well established brands to millions of new consumers around the world. As Want Want gradually increases its international presence, overseas markets have the potential to become a much more meaningful contributor to future growth. One of the most encouraging aspects of the company's international strategy is that it is already delivering tangible results. Overseas sales have continued to grow despite a challenging global trade environment, with particularly strong performance in markets such as Japan, India, and Africa. In Japan, products such as candies and biscuits have been especially well received by consumers, demonstrating that Want Want's brands can succeed outside Greater China. While overseas revenue still represents only a high single digit percentage of total sales, it is growing from a relatively small base, leaving significant room for expansion over the coming years. Want Want's international growth is supported by years of investment in manufacturing, distribution, and local operations. The company has established businesses in countries including Vietnam, Indonesia, Mexico, Australia, Germany, and several African markets. One of the most important milestones has been the expansion of its manufacturing facility in Vietnam, which has reached a meaningful production scale. This factory strengthens the company's supply chain by allowing it to serve Southeast Asia more efficiently while also supporting exports to Europe and North America. It also gives Want Want greater flexibility to respond to changing trade conditions, including tariffs, by producing products closer to end markets. Another advantage is that Want Want is not simply exporting the same products everywhere. Management adapts products, marketing, and distribution strategies to local consumer preferences while working with local distributors and OEM partners to expand its reach. The company also invests in social media campaigns, promotional events, and in store marketing to increase brand awareness in new markets. This localized approach improves the likelihood that Want Want's products will resonate with consumers rather than relying solely on demand from overseas Chinese communities. Perhaps most importantly, international expansion provides Want Want with another engine for long term growth at a time when China's food and beverage market is becoming increasingly competitive. As the company builds brand recognition, expands distribution, and increases manufacturing capacity outside China, it should be able to diversify its revenue base while reducing its dependence on any single market.

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Valuation

Now it is time to calculate the share price. I perform three different calculations that I learned at a Phil Town seminar. If you want to make the calculations yourself for this or other stocks, you can do so through the tools page on my website, where you have access to all three calculators for free.

The first is called the Margin of Safety price, which is calculated based on earnings per share (EPS), estimated future EPS growth, and estimated future price-to-earnings ratio (P/E). The minimum acceptable rate of return is 15%. I chose to use an EPS of 0,37, which is from 2026. I have selected a projected future EPS growth rate of 5%. Finbox expects EPS to grow by 4,6% a year in the next five years. Additionally, I have selected a projected future P/E ratio of 10, which is twice the growth rate. This decision is based on Want Want's historically higher price-to-earnings (P/E) ratio. Finally, our minimum acceptable rate of return has already been established at 15%. After performing the calculations, we determined the sticker price (also known as fair value or intrinsic value) to be HKD 1,49. We want to have a margin of safety of 50%, so we will divide it by 2. This means that we want to buy Want Want at a price of HDK 0,74 (or lower, obviously) if we use the Margin of Safety price.

The second calculation is known as the Ten Cap price. The rate of return that a company owner (or stockholder) receives on the purchase price of the company essentially represents its return on investment. The minimum annual return should be at least 10%, which I calculate as follows: The operating cash flow last year was 5.145, and capital expenditures were 1.145. I attempted to analyze their annual report to calculate the percentage of capital expenditures allocated to maintenance. I couldn't find it, but as a rule of thumb, you can expect that 70% of the capital expenditures will be allocated to maintenance purposes. This means that we will use 802 in our calculations. The tax provision was 1.278. We have 11.802 outstanding shares. Hence, the calculation will be as follows: (5.145 – 802 + 1.278) / 11.802 x 10 = HKD 4,76 in Ten Cap price.

The final calculation is called the Payback Time price. It is a calculation based on the free cash flow per share. With Want Want's Free Cash Flow Per Share at HKD 0,34 and a growth rate of 5%, if you want to recoup your investment in 8 years, the Payback Time price is HKD 3,41.

Conclusion

I believe Want Want is an intriguing company with strong management. The company has built its moat through its brand strength, vertically integrated supply chain, and extensive distribution network. I am very impressed by Want Want's ROIC. The company has consistently generated returns well above my 10% threshold, demonstrating the strength of its brands, disciplined capital allocation, and ability to earn high returns without requiring significant ongoing investment. I am also very pleased with Want Want's free cash flow generation. Despite increased investments and higher costs in recent years, the business has continued to generate strong cash flow, and I believe its established brands, recurring demand, and mature manufacturing network position it well to deliver even stronger cash generation over the long term. Changing consumer preferences is a risk because Want Want must continuously adapt its products to evolving consumer tastes and health trends while defending its market position against competitors. If it fails to keep its brands relevant for new generations of consumers, it could experience slower sales growth, lower margins, and a gradual loss of market share. Geopolitical and economic uncertainty is another risk because Want Want generates most of its revenue in mainland China, making it highly exposed to changes in government policy, economic conditions, and tensions between China and Taiwan. If these factors negatively affect consumer spending, supply chains, or investor sentiment, they could weigh on the company's growth, profitability, and valuation. Brand reputation is also important because Want Want's success depends on consumers continuing to trust its products. A food safety incident, product quality issue, or failure to meet evolving consumer expectations could damage that trust, leading to lower sales, higher costs, and a weaker competitive position. New products are a reason to invest because Want Want has consistently demonstrated its ability to develop products that align with changing consumer preferences while generating meaningful revenue growth. By continuously investing in research and development and expanding into healthier and more innovative product categories, the company is strengthening its brands and creating new growth opportunities. Expanding points of sale is another reason to invest because Want Want is successfully adapting to changing shopping habits by expanding across both traditional and emerging sales channels. This broader distribution network is increasing brand visibility, attracting new customers, and creating additional opportunities for long term growth. Overseas markets are also a reason to invest because Want Want is successfully expanding beyond mainland China, creating an additional growth engine while reducing its dependence on a single market. As its international investments in manufacturing, distribution, and local operations continue to gain traction, overseas markets have the potential to become a much larger contributor to future revenue. Overall, I believe there are many things to like about Want Want, and while it is not an industry I personally want exposure to, I believe buying a small position below the Payback Time price of HKD 3,41 could prove to be a rewarding long term investment for investors who are comfortable with the volatility that comes with investing in Chinese stocks.

My personal goal with investing is financial freedom. It also means that to obtain that, I do different things to build my wealth. If you have some extra hours to spare each month, you can turn a few hours a week into a substantial amount of money in a few years. If you are interested to know how I do it, you can read this post.

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