Want Want: A Snack Giant with Growth Potential

Want Want is one of the leading packaged food and beverage companies in Greater China, best known for its popular rice crackers, flavored milk drinks, and a wide range of snacks that have become household staples across generations. With strong brand recognition, deep distribution networks, and growing efforts in product innovation, health-focused offerings, and international expansion, the company continues to evolve alongside changing consumer trends. As it balances tradition with modern relevance and scales its presence beyond China, the question is: Does this snack giant deserve a place 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 a leading food and beverage manufacturer with origins in Taiwan and a strong operational base in mainland China. Since its founding in 1962, the company has evolved from an exporter of canned agricultural goods into one of Greater China’s most recognized names in packaged food. Its product portfolio spans rice crackers, dairy beverages, snack foods, and other specialty items, with manufacturing, logistics, and sales operations that are among the most extensive in the industry. The company operates 89 factories and 35 production bases, supported by 419 sales offices and over 10,000 distributors across mainland China. This infrastructure enables deep market penetration across both urban and rural areas, while international exports to North America, East and Southeast Asia, and Europe reflect its growing global presence. The recent establishment of a production base in Vietnam signals a continued push into overseas markets. Want Want generates strong margins across its core product categories. Rice crackers, a longstanding strength, delivered a gross margin of 44,1% in the latest fiscal year. Dairy products and beverages achieved a 49,7% margin, while snack foods generated a 44,5% margin. The company’s distribution model is hybrid, relying on both indirect sales through distributors and direct relationships with modern retailers and e-commerce platforms. This omnichannel strategy allows it to respond flexibly to evolving consumer habits. The company’s competitive moat is rooted in brand strength, operational scale, and cultural relevance. Want Want has built one of the most recognized food brands in Greater China, known to consumers across multiple generations. Its products are not just popular, they are deeply embedded in the cultural fabric, evoking strong emotional ties and brand loyalty. This brand equity has been built over decades through consistent quality and successful adaptation to local tastes. Its nationwide distribution network further reinforces its position. Few competitors can match its reach into remote and lower-tier cities, or replicate the long-term relationships it has with its distribution partners. This scale and reach act as a significant barrier to entry. Finally, Want Want’s broad product range, tailored to diverse consumer segments, allows it to stay relevant across age groups and regions. From sugar-coated crackers to herbal teas and yogurt drinks, its offerings are designed to match changing preferences while maintaining broad appeal. Altogether, Want Want’s business is built on a foundation of scale, trust, and familiarity, supported by a strategic blend of tradition and innovation that makes it difficult for competitors to displace.

Management

Tsai Eng-meng is the Chairman and CEO of Want Want China Holdings, a role he assumed at the age of 19 after succeeding his father, Jonathan Shuai Qiang Ng, the company’s founder. Since taking the helm, Tsai Eng-meng has led the transformation of Want Want from a canned agricultural goods exporter into one of Asia’s most prominent food and beverage companies, known for its rice crackers, flavored dairy drinks, and a broad range of snack foods. Under the leadership of Tsai Eng-meng, the company expanded aggressively into mainland China, where it built a vast manufacturing and distribution network that now includes dozens of production bases and over 10.000 distribution partners. This strategic pivot laid the foundation for Want Want’s evolution into a household name across Greater China and a recognized brand in international markets. Tsai Eng-meng’s leadership style is characterized by a combination of entrepreneurial boldness and cultural sensitivity. He has consistently emphasized the importance of innovation while maintaining deep ties to traditional tastes and consumer habits. One of his widely cited philosophies is, “No matter how difficult the situation is, there are always opportunities in the market,” a statement that reflects his opportunistic approach to adversity and market shifts. In addition to overseeing Want Want’s expansion in food and beverage, Tsai Eng-meng has also played a central role in the group’s media holdings through Want Want China Times Media Group in Taiwan. His influence spans both business and cultural spheres, and he is often ranked among Asia’s wealthiest individuals. Through his strategic vision and ability to scale operations without compromising brand identity, Tsai Eng-meng has positioned Want Want as a resilient and culturally resonant company in a highly competitive industry. His focus on brand equity, market responsiveness, and infrastructure investment continues to shape Want Want’s long-term success as a leader in packaged foods.

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. Unfortunately, I do not have the numbers from fiscal year 2017, as Want Want did not publish a separate annual report for that year. The figures were later included in the combined 2017–2018 report, making it difficult to isolate the 2017 results. Want Want China Holdings has consistently achieved a ROIC above 13% for the past decade, and it exceeded 17% in fiscal years 2024 and 2025 for the first time. This strong performance is the result of several factors working together. The company maintains high gross margins, typically around 45% for snack foods and close to 50% for dairy and beverages, while keeping capital spending relatively low. This combination of strong profitability and efficient use of resources supports a consistently high ROIC. In addition, Want Want has very little long-term debt, which keeps its financing costs low and strengthens overall returns. In the most recent years, profits have grown faster than the company’s need to reinvest, which has pushed ROIC even higher. The company managed to grow its earnings without significantly increasing its investment in the business. Although sales grew only slightly, profits rose at a faster pace, leading to a higher return on the capital already in place. More broadly, Want Want’s strong ROIC over the past decade reflects its ability to control costs, maintain healthy margins, avoid heavy borrowing, and grow steadily without constantly needing to reinvest large amounts. Looking ahead, analysts expect earnings to grow faster than sales over the next few years, which suggests that profits should continue to rise without the need for significant new investment.

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. The changes in Want Want’s equity over the past few years are mainly the result of shifts in profitability, dividend payouts, and share buybacks. Equity reached a record high in fiscal year 2022 due to strong earnings that added to the company’s retained profits. In the following year, equity declined because profits were lower and the company returned less to shareholders in the form of dividends. Equity began to grow again in fiscal years 2024 and 2025 as earnings improved and the company resumed more active capital management, including share buybacks. By the end of fiscal year 2025, equity had reached its second highest level ever, reflecting stronger financial performance and a more stable return of capital to shareholders.

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. Over the years, Want Want’s free cash flow has moved up and down even though profit margins have generally stayed strong. This is because free cash flow does not only depend on how much money the company earns, but also on how much it chooses to invest and return to shareholders. In fiscal year 2025, free cash flow and free cash flow margin reached their lowest levels in a decade. The main reason was a sharp increase in capital spending, as the company invested in upgrading production facilities and expanding capacity in its rice cracker, dairy and beverages, and snack food segments. While operating cash flow remained solid, more of it was directed toward these investments. The decline in free cash flow is not necessarily a concern, as it reflects a strategic decision to reinvest in the business during a period of financial strength. Want Want also had enough cash reserves to support both these investments and dividend payments, even though the dividend was slightly reduced to allow for more flexibility. Overall, this suggests that the dip in free cash flow was part of a longer-term growth strategy rather than a sign of weakness. The company typically uses its free cash flow to pay dividends, repurchase shares, and reinvest in its operations, so investors could reasonably expect dividend growth in the future if free cash flow continues to improve. The free cash flow yield is currently at its lowest point in the past decade, which would usually suggest the stock is more expensive than usual. However, since capital expenditures were unusually high in fiscal year 2025, this may not reflect the true picture. 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 only 0,1 years of earnings in debt, which is well below the three-year threshold and something I like to see. In recent years, Want Want has made it a priority to reduce its debt, and earnings now exceed long-term debt by a comfortable margin. As of fiscal year 2025, long-term debt fell to its lowest level in the past decade, while the company’s overall borrowings declined as well. At the same time, Want Want holds a large cash position and continues to operate with a net cash balance, meaning it has more cash than total debt. This financial strength gives the company greater flexibility to reinvest in the business, return capital to shareholders, or respond to new opportunities.

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Risks

Market risk is a risk for Want Want. The company’s performance depends heavily on consistent consumer demand in a fast-changing and highly competitive industry. As consumer preferences evolve, there is a real possibility that some of Want Want’s core product categories, such as rice crackers or flavored beverages, could become less popular, especially among younger consumers. Trends toward healthier eating, rising interest in natural or organic foods, and increased attention to sustainability may all influence purchasing decisions in ways that do not favor traditional packaged snacks. At the same time, competition is intensifying. Both domestic and international brands are competing in the same categories and may offer more innovative products, more attractive pricing, or stronger branding. This is particularly relevant in China, where consumers have a growing number of choices in snacks and drinks, including products from new direct-to-consumer brands and online-first companies. E-commerce platforms have made it easier than ever for newer brands to reach consumers directly, putting additional pressure on more established players like Want Want. If the company fails to respond to these shifts by adapting its product lineup, enhancing its marketing, or entering emerging segments such as health-focused or premium snacks, it could lose relevance and market share. The challenge lies in striking a balance between preserving the appeal of its iconic, long-standing products and keeping pace with what modern consumers want. How well Want Want navigates these shifts will play a major role in its ability to maintain growth and protect its margins.

Political and economic risk is a significant concern for Want Want due to its heavy reliance on operations in both mainland China and Taiwan. These two regions have a complex and sometimes tense geopolitical relationship, which creates ongoing uncertainty for companies operating across both markets. If political tensions escalate, whether through trade restrictions, sanctions, or even the threat of military conflict, it could disrupt Want Want’s manufacturing, supply chains, or access to consumers. These disruptions could increase costs or make it harder to distribute products, which would put pressure on margins. There is also the risk that changes in government policy, such as stricter regulations on food and beverage companies, higher tariffs, or shifts in currency controls, could impact Want Want’s profitability or financial flexibility. On the economic side, the company is exposed to broader trends in consumer spending, especially in China. If economic growth slows, if inflation rises, or if consumer confidence weakens, demand for non-essential items like packaged snacks and flavored beverages could decline, especially in lower-income regions. This would likely weigh on sales volume and earnings. Finally, these political and economic risks can influence investor confidence. Perceived instability or unpredictable policymaking may lead to weaker valuations and reduced interest from global investors, which in turn could affect Want Want’s access to capital and its long-term strategic flexibility. Given the company's geographic concentration and market exposure, political and economic developments in China and Taiwan remain an important risk to monitor.

Reputational risk is a significant concern for Want Want, as the company’s long-term success depends heavily on consumer trust and brand loyalty. Want Want has built its reputation over several decades, becoming a household name across generations. This brand strength is one of its most valuable assets, but it is also vulnerable. Any event that raises concerns about product quality, safety, or corporate responsibility could quickly undermine the trust that consumers have placed in the company. For example, a product recall linked to contamination or safety issues could lead not only to direct financial losses but also to lasting damage to the brand’s image. Accusations of using harmful ingredients, failing to comply with regulations, or engaging in poor labor practices could trigger widespread public backlash, especially in the age of social media where negative news can spread rapidly. Such incidents can drive consumers away, damage relationships with retailers and distributors, and attract unwanted regulatory attention. For a company like Want Want, whose brand carries emotional and cultural significance, reputational damage would not be easy to repair. Restoring trust would likely require time, transparency, and significant investment in both communication and operational improvements. This makes reputation not just a marketing asset, but a critical part of Want Want’s long-term competitiveness and resilience.

Reasons to invest

New products is a reason to invest in Want Want. The company has shown a strong commitment to innovation, consistently launching new products that reflect changing consumer tastes and preferences. Over the past five years, these new offerings have performed well and contributed a double-digit share of total revenue in fiscal year 2025, highlighting the success of Want Want’s product development efforts. The company has introduced a variety of new brands aimed at specific consumer groups. These include Baby Mum-Mum for infants and toddlers, Prime of Love for seniors, Want Power for health-conscious young professionals, and Fix XBody for people with active lifestyles. Many of these products are designed to offer health benefits, such as snacks with added probiotics or lower sugar content. In beverages, Want Want has launched popular new items like strawberry milk, unsweetened teas, and drinks focused on wellness, all of which have been well received by consumers. Even in its traditional rice cracker category, the company continues to innovate with new formats, improved taste, and healthier ingredients. Want Want has also expanded into fun and interactive products, such as popsicles with built-in surprise campaigns and snacks designed to be both entertaining and enjoyable. In addition, the company tailors products for different sales channels, including on-the-go items for convenience stores and larger packs for supermarkets. This approach helps reach a wider audience and meet the needs of different shopping occasions. By staying in tune with trends, investing in research and development, and refreshing its product lineup, Want Want is strengthening its brand and building new sources of growth, making product innovation a key reason to consider the company as a long-term investment.

Expanding points of sale is a reason to invest in Want Want. The company is actively broadening its reach by increasing the number and variety of places where its products are sold, which supports both revenue growth and brand visibility. In fiscal year 2025, Want Want strengthened its partnerships with major snack specialty retailers and deepened its presence in traditional wholesale and modern retail channels, which together accounted for the majority of the company’s revenue. At the same time, Want Want has been expanding its presence in emerging channels, including e-commerce, social media platforms, and OEM partnerships. Revenue from these newer channels grew at a double-digit rate and made up a meaningful share of total sales. The company has used tools like short videos and social media campaigns to connect more directly with younger consumers, while also developing customized gift products for platforms like WeChat, blending online convenience with festive shopping habits. Another key area of growth has been the rollout of smart vending machines, which give Want Want access to high-traffic urban areas and meet rising demand for on-the-go snacking. These machines not only improve product availability but also reduce dependence on traditional retail infrastructure. They are especially effective for products like rice crackers and snack foods that benefit from convenience-driven purchasing. By investing in a wider variety of points of sale, including vending machines, online platforms, and specialty retail formats, Want Want is building a more flexible and resilient sales network. This multi-channel strategy helps the company reach new consumers, respond to shifting shopping habits, and create more touchpoints for growth across both physical and digital environments.

Overseas markets is a reason to invest in Want Want. The company has made steady progress in expanding its international presence, and these efforts are beginning to deliver strong results. In fiscal year 2025, overseas revenue grew at a double-digit rate, making it one of the main drivers of the Group’s overall growth. While overseas sales still account for a smaller share of total revenue, this part of the business is gaining momentum, with particularly strong performance in Japan, North America, and parts of Southeast Asia. Want Want’s success abroad is supported by a combination of factors, including its diversified product range, well-established manufacturing and R&D capabilities, and its ability to tailor marketing and product strategies to local preferences. The company has actively invested in building out its international infrastructure, with subsidiaries established in markets such as Vietnam, Indonesia, Australia, and Germany. A major milestone in this effort is the Vietnam production facility, which has grown to a significant scale and is now helping to meet demand across Southeast Asia. This factory not only enhances the efficiency and flexibility of Want Want’s supply chain, but also supports regional growth with locally adapted products. The company’s overseas strategy also includes developing OEM partnerships, expanding distribution channels, and launching targeted promotional campaigns to boost brand awareness. For example, Want Want has engaged consumers through social media, in-store tasting events, and seasonal promotions tailored to each market. As the company continues to grow its footprint in international markets and reduce its dependence on domestic demand, it adds another engine for long-term growth. The expansion into overseas markets strengthens the brand, diversifies revenue sources, and increases resilience against regional risks.

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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 0,39, which is from 2025. 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 1,57. 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 0,79 (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 4.460, and capital expenditures were 679. 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 475 in our calculations. The tax provision was 1.513. We have 11.803 outstanding shares. Hence, the calculation will be as follows: (4.460 – 475 + 1.513) / 11.803 x 10 = HKD 4,66 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 0,32 and a growth rate of 5%, if you want to recoup your investment in 8 years, the Payback Time price is HKD 3,21.

Conclusion

I believe Want Want is an intriguing company with strong management. The company has built its moat through its brand strength, operational scale, and cultural relevance. It has consistently achieved a high ROIC, which is expected to continue in the future. Free cash flow reached its lowest point in a decade in fiscal year 2025, but this was due to increased investment that should support higher cash flow going forward. Market risk is a concern because Want Want’s success depends on keeping up with changing consumer preferences and staying competitive in a crowded snack and beverage industry. If the company fails to adapt its products or branding, especially for younger or more health-conscious consumers, it risks losing relevance and market share. Political and economic risk is also worth noting due to Want Want’s reliance on both mainland China and Taiwan, where tensions or policy changes could disrupt operations, increase costs, or affect consumer demand and investor confidence. Reputational risk matters too, as Want Want’s long-term success depends on maintaining the trust it has built over decades. Any issues with product quality, safety, or ethics could damage that trust and have lasting effects. On the positive side, new products are a key reason to invest. The company has consistently launched successful and relevant innovations, including health-focused and age-specific products that now make up a meaningful part of its revenue. Another strength is its expanding points of sale, including traditional retail, e-commerce, social media, and vending machines, all helping to reach more consumers and support revenue growth. Overseas markets are also becoming a larger driver of performance, with strong growth in regions like Japan, North America, and Southeast Asia. By localizing products and building international infrastructure, Want Want is diversifying its revenue base and reducing its dependence on the Chinese market. I believe Want Want is a great company and a good way to gain exposure to a Chinese consumer staple. Buying shares at the Ten Cap price of HKD 4,66 could be a solid long-term investment.

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