Rating: Cautiously Bullish | Target Price: RMB 43-50 | Current Price: RMB 38.86 (close on 2026-10-30)
Margin of Safety: approx. +11% (baseline fair value floor of RMB 43 vs current price) | Probability-weighted fair value approx. RMB 45.0 (approx. +16%) | Time Horizon: 12-18 months
Market cap approx. RMB 10.50 billion | PE-TTM 14.5x (approx. 15.3x on recurring earnings basis) | PB 4.64x | 2025 cumulative dividends imply a dividend yield of approx. 3.6%
Yanjin Puzi is one of the snack food companies on the A-share market with the highest earnings quality and capital returns (ROIC of approx. 17-20% excluding government subsidies; operating cash flow/attributable net profit at 1.21-1.77 for four consecutive years; a cash-on-delivery distribution model), and it is undergoing its most severe growth transition since listing: 2026Q3 quarterly revenue -1.7%, attributable net profit -33.8%, growth of its top single product (konjac) has fallen to zero, and the proactive contraction of e-commerce and quantitative circulation channels has yet to bottom out. The stock is down approx. 45% year-to-date, with PE-TTM at 14.5x in its lowest range since listing — the market is already pricing this company for "zero to slight growth."
Our judgment: this is a left-side opportunity of "intact quality, price punished first," not a value trap — egg products (Q3 +50%+) and seafood snacks (Q3 +30%+) are taking over as growth drivers, capex is falling back from its RMB 0.90 billion peak, and one-off pressures from cod/packaging costs and social security top-up payments will dissipate in 2027; the low base of just RMB 144 million in attributable profit in 2025Q4 provides a window for year-over-year recovery into 2026Q4-2027. However, structural constraints are real: channel concentration with top-5 customers at 42.8% of revenue, enlarged related-party procurement from a controlling-shareholder affiliate, and government subsidies accounting for approx. 14% of profit — these cap both the ceiling and pace of valuation recovery. Baseline scenario fair value is RMB 43-50, +11% to +29% vs current price; we are cautiously bullish — the odds are positive but not fat (+20% to baseline midpoint, -26% to bear-case midpoint), and position sizing should follow verification of the bottoming process via the January 2027 earnings preannouncement and the April annual report.
Current situation: The company is in a "repricing period after the burst of the high-growth narrative." From 2021-2025, the double tailwind of discount retail channel dividends and the konjac mega-single-product doubled revenue over five years; in 2026, both decelerated simultaneously (discount retail entering a second phase of slowing store openings and private-label substitution; konjac revenue roughly flat for 9M26), and the market has switched from a growth-stock framework to a "peak earnings" framework — the stock has halved year-to-date, and sell-side target prices have been revised down within a year from the RMB 80-98 range to around RMB 57.5, with further cuts still underway.
The most important change over the next 6-12 months is channel-clearing verification: the e-commerce revenue decline has narrowed from -49.3% in 2026H1 to approx. -36% in Q3, and after optimizing distributors from 4,367 to 3,845, the company has stated for two consecutive quarters that "the adjustment is nearing its end." If the e-commerce decline narrows to within -10% in 2026Q4 and total revenue turns positive for a single quarter (2025Q4 revenue base was only approx. RMB 1.33 billion), the "2026 adjustment year → 2027 efficiency-release year" inflection narrative can be established; conversely, if the adjustment drags into H2 2027, the market will continue compressing the valuation as a zero-growth food stock.
Primary share price driver: A revenue inflection (channel clearing) precedes margin repair — PE-TTM at 14.5x is no longer expensive, but recovery above 15-16x requires revenue stabilization as a precondition; second are gross margin and expense ratios (konjac flour prices falling from highs, no repeat of social security top-ups in 2027, sales expense ratio falling back from 12%).
Verifiable expectation gap: Sell-side consensus (2026E attributable net profit approx. RMB 838 million, 2027E approx. RMB 973 million, median target price RMB 57) has not yet fully digested the Q3 report and is still being revised down; conversely, the implied normalized earnings at the current price, backed out at the A-share peer median of approx. 18x, is only approx. RMB 580 million (a further approx. 19% below TTM). Our baseline (2027E attributable net profit of RMB 780-840 million) falls between the two — as long as 2027 profit returns to the RMB 800 million platform (no need to reach consensus of RMB 970 million), the current price is undervalued; the realization of this expectation gap does not depend on optimistic sell-side assumptions.
Falsification conditions (see tracking section): e-commerce decline still exceeds 20% in the 2026 annual report or Q4 revenue turns negative; top customer's share rises above 35% or its sales decline; gross margin declines over 1.5pp YoY for two consecutive quarters; receivables growth persistently exceeds revenue growth by more than 25pp.
Key evidence:
For 2023-2025, OCF/attributable net profit was 1.31, 1.77, and 1.21 respectively — book profits are generally convertible to cash, reflecting the real returns of the company's "cash-on-delivery" distribution model and vertical self-supply across the supply chain. But two factual caveats must be noted: first, the +45% YoY increase in OCF for the first three quarters of 2026 came almost entirely from reduced payments to suppliers and inventory release (cash paid for goods purchases -13.4%, inventory -18.5%), with zero growth in cash receipts — this is a one-off release of working capital; in 2027, if konjac flour prices fall, restocking will be needed and this tailwind disappears. Second, government subsidies (RMB 79 million in the first three quarters of 2026, approx. 13.7% of attributable net profit) together with the 2025 reversal of share-based payment expenses have jointly inflated apparent returns — ROIC excluding subsidies is approx. 17-20%, and weighted ROE has fallen from 40.9% in 2024 to 26.8% in the first three quarters of 2026. Quality remains top-tier in the A-share snack sector, but the "high ROIC + high ROE" premium narrative deserves a discount.
Key evidence:
Percentile figures should be used cautiously: the company's channel structure changed dramatically after 2021 (discount retail + e-commerce replacing supermarket bulk sales), making historical percentiles not fully comparable, and the low PB percentile and falling ROE share the same origin. More robust is implied expectations analysis — backed out at the A-share peer median of approx. 18x, the current price implies normalized attributable net profit of only approx. RMB 580 million (19% below TTM); backed out at direct competitor Weilong's 10.7x, it implies approx. RMB 980 million (36% above TTM). Between these two anchors, the market is pricing Yanjin Puzi for "zero to slight growth" and paying almost nothing for the 20%+ profit growth seen in 2024-2025. Given the company's real earning power (TTM attributable net profit RMB 723 million; first-three-quarter revenue still +2.4%; egg products/seafood growing 30-50%), the valuation has largely priced in the pessimistic scenario; downside (on valuation grounds) is limited, while upside depends on growth verification.
Key evidence:
The growth-switching picture is real, but quality must be downgraded: egg products' +51% in 2026H1 was built on a deep base of approx. -6.5% in H2 2025 (2025 full-year volume only +0.29%; growth driven by price increases), and 2027 will face a high base of approx. RMB 950 million-1.0 billion from 2026; seafood is trading margin for share (gross margin -7.54pp in 2025, another -2.28pp in 2026H1; growth decelerating from +55.7% to +30%+); konjac turned negative in Q3 alone-quarter (this report estimates approx. -9% based on 9M flat and H1 +11.3%). The category switch comes with a structural margin downgrade — high-margin konjac (34.9%) is stalled while mid-margin egg products (28.2%) scale up; the Q3 single-quarter gross margin of -2.2pp has already validated this logic. The baseline scenario (2027E attributable net profit RMB 780-840 million, +7% to +16%) requires three conditions to materialize simultaneously: channel clearing, cost declines, and expense ratio mean-reversion. This is therefore a left-side, verification-dependent investment: verification points are the January 2027 earnings preannouncement and the April annual report/Q1 report — not now.
Key evidence:
The discount snack retail duopoly (Mingming Henmang + Wanchen, CR2 approx. 76%) has been both the company's largest growth source over the past five years and now its largest structural constraint: the top customer accounts for 30.85% of revenue and rising yearly; top-5 accounts receivable concentration rose to 76.4% (2026H1 basis, payment terms approx. 19 days); channel willingness to prepay is weakening (contract liabilities -32.4%); with the two leaders pivoting to single-store efficiency and private labels, upstream suppliers face an industry-wide squeeze from "volume up, margin down" to "volume and margin both pressured." Combined with related-party procurement tripling in share within a year during the konjac flour price-up cycle (fairness of benefit allocation backed only by a self-declared "market price principle"), government subsidies at approx. 13.7% of attributable net profit, and co-actual-controller Zhang Xuewen pledging 27.75% of his holdings (3.75% of total share capital), these constraints collectively determine: bear-case probability approx. 30% (fair value RMB 26.6-31.3), baseline scenario exit multiple only deserving of 15-16x (a discount to the A-share peer median), and a capped valuation recovery.
| Metric (RMB 100M / %) | 2023FY | 2024FY | 2025FY | 2026Q1-3 (latest) |
|---|---|---|---|---|
| Revenue | 41.15 | 53.04 (+28.9%) | 57.62 (+8.6%) | 45.31 (+2.4%) |
| Attributable net profit | 5.06 | 6.40 (+26.5%) | 7.48 (+17.0%) | 5.79 (-4.3%) |
| Recurring attributable net profit | 4.76 | 5.68 | 7.15 (+25.9%) | 5.23 (-5.5%) |
| Gross margin | — | — | 30.80% | 31.31% (Q3 single quarter 29.39%) |
| Net margin | 12.29% | 12.07% | 12.99% | 12.78% (Q3 single quarter 10.51%) |
| Operating cash flow | 6.64 | 11.34 | 9.09 | 9.00 (+45.3%) |
| Free cash flow (OCF − capex) | 3.17 | 3.51 | 0.08 | 4.81 |
| Cash and equivalents | — | — | 1.67 (year-end) | 2.58 (end of September) |
| Interest-bearing debt | — | — | — | 9.98 (end of September; net debt approx. 7.40) |
| Debt-to-asset ratio | — | — | 47.07% | 47.47% |
| Weighted ROE | 38.92% | 40.86% | 36.82% | 26.80% (first three quarters) |
Note: Cash and equivalents/interest-bearing debt are stock items taken from the latest balance sheet (2026-09-30); certain 2023/2024 items were not separately verified in this data extraction and are marked "—"; the 2024 recurring profit figure is cited from the 2025 annual report comparison column (RMB 568 million).
Drivers of notable metric changes (YoY ≥ ±20% items, with company explanations): ① First-three-quarter operating cash flow +45.33%; company explanation: "mainly due to reduced cash paid for goods purchases this period" — i.e., driven by destocking on the procurement side (inventory -18.5%), not improved cash collection; ② Long-term borrowings +116.56% vs beginning of period, explained as construction-in-progress capacity investment (construction in progress RMB 416 million + prepaid construction payments RMB 166 million); ③ Accounts receivable +41.07% vs beginning of year, annotated by the company as "mainly due to increased accounts receivable" (tautological; customer structure reasons not disclosed, requires continued tracking); ④ Credit impairment loss -541.99% (reversal of RMB 5.33 million), due to increased bad debt provisions; ⑤ Financing cash flow -559.41%, due to increased debt repayment and payments for share buybacks under equity incentives; ⑥ E-commerce channel revenue -49.26% in 2026H1 and approx. -36% in Q3, explained as proactive contraction of low-margin white-label categories and a return to the essence of supply-chain e-commerce; ⑦ 2025 konjac revenue +107.23% (volume ramp of the "Demon King" sesame-sauce konjac strips) and overseas revenue +172.47% (channel breakthroughs including Thailand 7-Eleven); ⑧ 2025 sales expenses -8.71%, partly attributed by the company to "reversal of previously accrued share-based payment expenses" (one-off lowering of the base).
Q3 single-quarter revenue was RMB 1.461 billion (-1.70%), a rare single-quarter negative growth since listing; attributable net profit RMB 154 million (-33.77%), recurring net profit RMB 133 million (-39.28%). All three pressures have company-confirmed explanations: sales expense ratio up 3.4pp in the quarter to approx. 12 (brand investment launch year + route-to-market costs of the quantitative circulation large-distributor strategy); the H1 social security base adjustment top-up concentrated in Q3; packaging costs +10% and deep-sea cod raw materials +40%. Single-quarter gross margin was 29.39% (-2.2pp YoY). Structurally, high-potential channels such as discount retail and membership stores remain the fastest-growing, with egg products +50%+ and seafood +30%+; the drag came entirely from the actively adjusted e-commerce (approx. -36%) and quantitative circulation channels. Within two trading days after the Q3 report, the stock had already weakened ahead of disclosure (a single-day -5.02% on 10-21); the National Social Security Fund Portfolio 102 increased its stake to 1.90% to become the fourth-largest shareholder, while northbound holdings fell to 1.25% — the bull-bear divergence widened at the bottom. On whether the results "missed market expectations": pre-report sell-side consensus (2026E attributable net profit RMB 838 million) implied approx. RMB 610-630 million for the first three quarters; the actual RMB 579 million was 5-8% below that path — a "confirmed downward revision" rather than an "unexpected blowup." The day after the Q3 report, Guotai Haitong cut its target price from RMB 63.6 to RMB 57.5 (17x 2027E), and there is still no rating below Neutral across the market.
Business model sketch: An asset-heavy, self-manufactured, multi-category branded snack platform — over 95% self-produced across four production bases, vertically extended upstream into primary industry: quail farming (Danhwangji), konjac flour processing, potato granules, etc.; all revenue is one-time FMCG sales with no subscription or contractual revenue; repeat purchase manifests in channel structure (high-frequency sell-through in discount retail/membership stores) rather than on the books. Positioned as "tasty and affordable" value-for-money, with weak single-category pricing power; cost hedging relies mainly on self-supply rates and scale. Among A-share peers, it is closest to a "manufacturing platform model," distinct from Weilong's brand-premium model (gross margin 48% vs Yanjin's 31%) and Three Squirrels' channel-brand OEM model (gross margin 24%).
Cash content of earnings: OCF/attributable net profit was 1.31→1.77→1.21 for 2023-2025, consistently above 1 — the cash collection discipline (cash-on-delivery from distributors) is real. But the 1.55 for the first three quarters of 2026 contains clear one-off elements (see C1): the cash improvement came from reduced supplier payments and destocking, the cash-to-revenue ratio fell from 1.113 to 1.086, and receivables rose 41% vs the beginning of the year. FCF/attributable net profit: 0.63→0.55→0.01→0.83 (first three quarters): 2025 was almost entirely consumed by RMB 900 million of capex; 2026 turned positive again as capex fell back (RMB 419 million in the first three quarters, -40% YoY) — but quail farming Phase IV is "about to start" (conference call language) and prepaid construction payments are +63%; the capex cycle has not ended, and FCF release should not be extrapolated linearly.
Recurring earnings test: Government subsidies recognized in P&L were RMB 107 million, 94 million, and 79 million for 2024, 2025, and the first three quarters of 2026, respectively, approx. 13-16% of attributable net profit — the largest block of "non-operating yet recurring" profit; the 2025 expense decline included a share-based payment reversal (one-off), and the return of new incentive expenses in 2026 is one component of the Q3 expense ratio jump. Excluding subsidies, the "clean" earnings run-rate is approx. RMB 620-640 million/year (TTM basis), with a still-positive trend.
Return on capital: A simplified ROIC using attributable equity + net debt as invested capital is approx. 24% (broad basis); approx. 17-20% excluding other income (mainly government subsidies), still well above the approx. 9.5% discount rate/cost of capital — expansion is creating value, and the moat (cost leadership + full-channel positioning) has data support. But the return trend has been falling since its 2024 peak (ROE 40.9%→36.8%→26.8% for the first three quarters), sharing the same origin as declining net margins.
Capex quality: CapEx/D&A was 2.1→4.3→4.6 for 2023-2025, reflecting expansionary investment (Danhwangji farming base Phases III/IV, potato base, north-south dual bases), not a maintenance black hole; the company does not disclose a maintenance/growth split, but based on depreciation scale (approx. RMB 200 million/year) and capacity ramp-up pace, we estimate maintenance investment at approx. RMB 200-250 million/year — the bulk of current capex is growth investment. Whether that investment pays off depends on subsequent volume growth in egg products and seafood, which is exactly the verification content of C3.
Red flags: ① Customer concentration rose from 20.6% to 42.8% over three years (see C4); ② near-zero FCF in 2025, with expansion dependent on long-term borrowings (+116.6%); ③ government subsidies approx. 14% of profit; ④ discount retail channel revenue share not separately disclosed (merged into "distribution and others"), insufficient transparency on the decisive channel data.
Words-to-deeds consistency: prefers qualitative statements, lacks quantitative guidance, and partial track record of unfulfilled promises. The 2025 annual report (2026-04) pledged to "drive steady improvement in operating quality" in 2026 and to shift the "channel focus from construction phase to efficiency release phase." Yet in the first three quarters of 2026, revenue grew only +2.4%, with Q3 net profit attributable to parent down -33.8%. On earnings calls, management itself admitted "2026 is an adjustment year for the company"—a case of "hedged target statements with results explained after the fact." The claim that the e-commerce adjustment is "nearing its end" was repeated in both the 2026-08-20 and 10-27 exchanges, while Q3 e-commerce revenue was still down roughly -36%—guidance fulfillment lagging its own timeline by a quarter. At earnings meetings, questions on Q4/full-year guidance and H2 expense ratios were repeatedly deflected with "please refer to periodic reports," placing the company among the more conservative on guidance disclosure among A-share consumer companies.
Shareholder friendliness: dividend and buyback record among industry leaders. FY2024 cash dividends plus buybacks totaled RMB 496 million, or 77.57% of net profit attributable to parent (as disclosed); FY2025 cumulative dividends of RMB 382 million, a payout ratio of 51% (our estimate; cumulative payout of ~RMB 14.1 per 10 shares); cumulative cash dividends and buybacks of RMB 2.337 billion since listing (company's 2026-09 figures); completed a 3-million-share cancellation buyback from December 2025 to January 2026 (1.10% of total share capital), with cancellation completed in September 2026, reducing share capital to 270 million shares; 2026 interim dividend authorization approved by shareholders. No record of secondary offerings, rights issues, or convertible bonds; the unlocked portions of five rounds of equity incentives were all bought back and cancelled. On 2025 figures, dividend yield is roughly 3.6%, and 2026 FCF (RMB 480 million in the first three quarters) is sufficient to support a similar payout level.
Risk signals: ① Related-party transactions—Yunnan Jinjue Konjac, 52.5% owned by the controlling shareholder, is the largest supplier, with procurement share rising from ~4.3% to 13.22% within a year, coinciding with konjac refined powder prices rising over 30%; pricing fairness rests only on self-declaration (see the Financial Engineering and Cross-Period Consistency section). ② Co-actual-controller Zhang Xuewen has cumulatively pledged 27.75% of his holdings (10.13 million shares, 3.75% of total share capital), a net increase of 1.55 million shares within one month, for "personal funding needs"; a 2-million-share sell-down record in July 2024 (media reported). ③ Small sell-downs by the CFO and a Vice President in December 2025. ④ Board reconstitution completed in August 2026, with the controlling shareholder's dominance continuing. Overall judgment: shareholder-return actions are genuine and sustained, but governance carries three shadows—"related-party procurement + share pledging + avoidance of quantitative guidance"—a discount rationale for foreign and governance-sensitive institutions (northbound capital has already reduced holdings).
By category (2025 annual report basis):
| Category | Revenue share | Gross margin | YoY | One-line business logic |
|---|---|---|---|---|
| Konjac snacks | 30.15% | 34.48% | +107.23% | "Great Devil" sesame-sauce veggie konjac cubes as hero SKU; volume scaling across mass-retail + membership stores; 26H1 growth slowed to +11.3%, 9M flat |
| Baked potato snacks | 15.59% | 27.42% | -22.43% | Contraction of low-margin e-commerce + active adjustment; self-supplied potato flour |
| Seafood snacks | 13.19% | 45.64% | +12.53% | #1 in 31°Fresh fish tofu category; cod costs compressing margin (-7.54pp); 26H1 +55.7%, Q3 +30%+ |
| Dried fruit & jelly | 13.00% | 20.93% | +4.32% | Konjac jelly full-score; lowest-margin category |
| Healthy egg products | 10.90% | 27.73% | +8.35% | "Egg Emperor" quail eggs with fully integrated in-house farming; 26H1 +51.2%, Q3 +50%+ |
| Soy snacks | 6.25% | 30.25% | -0.39% | Traditional category, replicating the konjac hero-SKU model |
| Others | 10.92% | — | -35.32% | Active contraction of non-core categories |
Profit drivers: Estimating gross profit contribution via "revenue share × gross margin," konjac contributes ~34% of total gross profit (10.4pp/30.8pp) and seafood ~20%—together they generate ~54% of gross profit on 43% of revenue, the true profit engines; baked potato, the second-largest revenue category (15.6%), contributes only ~14% of gross profit. The 2026 structural shift is "konjac (high margin) stalling, egg products/seafood scaling but seafood margin declining"—the profit engine's quality is being somewhat diluted in transition.
Gross margin spread: Highest seafood at 45.64% vs lowest dried fruit at 20.93%, a gap of nearly 25 percentage points—the spread stems from depth of raw-material self-supply (seafood's surimi/fish tofu processes and egg products' in-house farming) and category competitive structure (dried fruit is a fully commoditized category with no brand premium), confirming that "going one step further upstream" is the first-order variable for this company's gross margins.
By channel: Offline 84.0% → 90.5% in 2026H1 (driven by rapid growth in mass-retail + membership stores; offline +16.8% in 2025, ~+17% in 26H1); online 16.0% → 9.5% (active contraction; 2025 -20.5%, 26H1 -49.3%, Q3 ~-36%). After distributors grew +21.8% to 4,367 in 2025, a net decline of 522 to 3,845 in 2026H1 (focus on large distributors). Single-core business company; segments presented along dual dimensions of category + channel.
Accounting red flags: ① Sharp rise in related-party procurement (medium): Jinjue Konjac procurement jumped RMB 131 million → 402 million (+206%), 13.22% of same-type procurement; pricing fairness in a rising-price cycle remains to be verified; the 2026H1 related-party transaction table shows a caliber mismatch in the "whether exceeding approved quota" field (to be verified). ② Receivables growth far outpacing revenue (medium): +41.1% vs +2.4%; the company's explanation is tautological; signs of extended payment terms with direct KA and mass-retail channels. ③ Share-based payment reversal depressing the 2025 expense base (low): the 2026 expense ratio jump includes the backlash from this base effect. ④ Low-cost inventory smoothing margins (low): low-priced konjac inventory at period start diluted the current-period price impact; Q3 gross margin has already fallen back as price increases fully passed through. ⑤ Year-end concentrated disposal losses (low): RMB 58.4 million in non-current asset disposal losses concentrated in 2025 (Henan Jinfeng, etc.), lowering the Q4 base.
Cross-period consistency: ① Top-5 customer concentration 20.63% → 32.39% → 42.81%, unexplained by the company; when questioned at the earnings meeting, management only answered "we value and maintain stable cooperation"—company did not explain; ② Konjac growth +107% → +11.3% → flat, attributed by the company to channel optimization and SKU adjustments—consistent; ③ FCF/net profit 0.63 → 0.55 → 0.01 alongside CapEx/depreciation 2.1 → 4.3 → 4.6, explained as "construction phase → efficiency release phase"—consistent (2026 capex has indeed declined); ④ Online share 20.1% → 21.9% → 16.0% → 9.5%, consistent with company statements—consistent; ⑤ Distributors 3,587 → 4,367 (+21.8%) → 3,845 (-11.9%), with the annual report and interim report using the same phrase "strategic distributor optimization" for both the increase and the decrease—inconsistent (the same explanation covering opposite-direction changes is a disclosure caliber flaw).
Overall judgment: no hard evidence of fabricated revenue or profits; cash flow-to-profit matching has long been positive; but the combination of "related-party procurement + surging receivables + subsidy reliance + base-depressing reversals" means reported profits should be used with a 10-15% credibility haircut; ex-non-recurring plus ex-subsidy caliber is the more stable anchor.
Current market data (2026-10-30 close): Share price RMB 38.86, market cap RMB 10.50 billion, total shares 270.19 million. PE-TTM 14.5x (~1st percentile over 1/3/5 years), static PE 14.0x, PB 4.64x (~3rd percentile over 10 years), PS-TTM 1.79x, dividend yield ~3.6%. Percentile caveat: given the drastic channel-structure change post-2021 and earnings in "soft landing" rather than a cyclical trough, the PE percentile is for reference only, not a headline cheapness signal. Average daily turnover ~RMB 150-300 million (1.5-3% of market cap); liquidity normal.
Peer benchmarks:
| Company | PE-TTM | 2026 9M revenue growth | Gross margin | ROE (latest) | Key difference vs Yanjin |
|---|---|---|---|---|---|
| Yanjin Shop | 14.5x | +2.4% | 31.3% (9M) | 26.8% (9M; 2025FY 36.8%) | Multi-category manufacturing platform + omnichannel; highest ROE in the sector |
| Weilong Delicious (09985.HK) | ~10.7x | +6.7% (H1) | 48.0% | 21.4% (2025FY) | Brand premium model, ~70% share in konjac snacks; H-share liquidity discount |
| Jinzai Food | 18.2x | +18.4% | 25.6% | 11.4% (9M) | Also a mass-retail supplier; about half Yanjin's size, narrower categories |
| Ganyuan Foods | 18.3x | +5.7% | 33.3% | 9.1% (9M) | Single track in nuts/seeds; 2025 net profit -44.6% |
| Qiaqia Food | 17.7x | +19.1% | 26.1% | 7.3% (9M) | Dominated by sunflower seed cost cycle; TTM includes low-base rebound |
| Three Squirrels | 26.3x | -5.6% | 25.9% | 8.4% (9M) | Channel-brand OEM model; net margin only 3.3% |
Market-implied expectations: Double-anchor back-solving (see C2)—under the A-share peer median anchor, implied normalized net profit ~RMB 580 million (-19% vs TTM); under the Weilong anchor, ~RMB 980 million (+36% vs TTM). The range reads as the market pricing "zero to slight growth." Reverse DCF (9.5% discount rate, zero perpetual growth) requires steady-state FCFF of ~RMB 1.0 billion—i.e., profits would need to grow another ~38% above the current run-rate and then stop growing—what the current price demands is not "the company getting worse" but "the company no longer getting better"; if the perpetual growth assumption is relaxed to 1%, the requirement falls to ~RMB 890 million, narrowing the gap with the ex-non-recurring TTM of RMB 685 million plus modest recovery. The conclusion is parameter-sensitive and should not be over-read.
Three-tier value (EPV): Asset value ~RMB 8.4/share (book net assets attributable to parent of RMB 2.263 billion; replacement cost of the four major production bases + farming capacity no lower than book value)—an independent floor reference. EPV at zero growth ~RMB 25.3/share (sustainable FCFF ~RMB 720 million: net profit attributable 7.2 + after-tax net interest 0.1 + D&A 2.5 − maintenance capex ~2.5 − working capital 0.2; divided by 9.5%, minus net debt of RMB 2.74/share; realized base period, excluding any planned capacity or forecast growth), range RMB 21.3-28.5. Current price of RMB 38.86 = EPV of 25.3 (~65%) + growth option ~13.5 (~35%, our estimate)—the growth option share is not low; the current price is not "paying only for zero growth"; the consideration paid corresponds to a modest combination of egg products/seafood/overseas expansion and a second konjac scaling wave, with the option's quality to be validated in 2027. The three-tier structure indicates: the valuation floor in the downside scenario sits near the upper end of the EPV range (RMB 28.5) rather than asset value; the current price carries a ~36% premium to that floor.
Three scenarios and odds (12-18 month horizon):
| Scenario | Probability | Fair range (RMB) | vs current price | Decisive factors |
|---|---|---|---|---|
| Bear | 30% | 26.6-31.3 | -19% to -32% | Channel adjustment dragging into full-year 2027 + mass-retail private-label substitution + high cod/packaging costs; 2027E net profit RMB 600-650 million × 12-13x (anchor: Weilong 10.7x + earnings-revision discount) |
| Base | 50% | 43-50 | +11% to +29% | Adjustment clearing by 2026Q4-2027H1, egg products/seafood taking over, expense ratio down 1-2pp; 2027E net profit RMB 780-840 million × 15-16x |
| Bull | 20% | 60-70.3 | +54% to +81% | Second konjac scaling + overseas Mowon breakthrough + full realization of cost tailwinds; 2027E net profit RMB 900-950 million × 18-20x |
Exit multiple anchoring rationale: Base case at 15-16x, a 10-20% discount to the A-share snack peer PE-TTM median (Jinzai 18.2/Ganyuan 18.3/Qiaqia 17.7, ~18x)—the discount reflects C4's channel concentration and growth downshift; a 40-50% premium to Weilong's 10.7x—the premium reflects ROE (26-37% vs 21%), multi-category hedging, and continued revenue expansion, plus Weilong carries an H-share liquidity discount; notably below the company's ~29.7x historical 5-year center (not comparable post structural downshift; reference only). The bear case at 12-13x anchors to Weilong's current multiple plus a revision-period discount. The company's current trading multiple (14.5x) is not used as an anchor for any scenario—reference only.
Our forecasts vs guidance vs consensus: 2026E revenue RMB 5.83-5.89 billion (+1.2% to +2.2%), net profit RMB 709-739 million (-5% to -1%); 2027E revenue RMB 6.15-6.45 billion (+5% to +10%), net profit RMB 780-840 million (+7% to +16%). The company provides no quantitative guidance (qualitative: "adjustment year," "efficiency release phase"); sell-side consensus of 2026E RMB 838 million / 2027E RMB 973 million has not yet fully revised down—our forecasts are 12-20% below it; Guotai Haitong already cut to ~RMB 754 million for 2026E / ~RMB 913 million for 2027E the day after Q3 results—the revision process itself may continue to pressure the stock, constituting a left-side time cost.
Conclusion: Undervalued, but of the "left-side, validation-dependent" kind. Target price RMB 43-50 (base-case fair value), margin of safety ~+11% (base-case floor vs current price). Assess quality (ROIC 17-20%, cash conversion, shareholder returns) and price (decade-low valuation, zero-growth-implied pricing) separately: quality is excellent but capped (C4 constraints); the price is cheap but needs catalysts. Probability-weighted fair value across the three scenarios ~RMB 45.0 (~+16%), with asymmetric odds skewed positive: +20% to the base-case midpoint vs -26% to the bear-case midpoint.
Market size: China's snack food industry is expected to reach approximately RMB 1,180.4 billion in 2025, up +10.3% YoY (iiMedia Research, primary institutional source), with a CAGR of ~7.3% for 2010–2025; total volume CAGR is projected at 4–6% over the next 3–5 years (CIC: snack and beverage retail CAGR of ~5.3% for 2025–2030). The industry has entered maturity in aggregate volume, with the real variable being structure: the mass-market snack (hard-discount collection store) sub-channel saw GMV grow from RMB 7.3 billion in 2020 to ~RMB 219.5 billion in 2025 (CAGR of 81.5%, per CIC/Wanchen prospectus; the 2025 figure is inferred from Mingming Hen Mang's GMV of RMB 93.5 billion and a 42.6% market share), and is projected at a CAGR of ~27.7% for 2025–2030, reaching ~RMB 725.9 billion by 2030; konjac snacks were ~RMB 18.3 billion in 2024, one of the fastest-growing category tracks. For upstream manufacturers, this channel shift is a "redistribution of channel increment": Yanjin Puzi's mass-market snack channel revenue share rose from ~17% in 2023H1 (company IR disclosure) to ~30% in 2024 (broker research estimate; company has not separately disclosed, to be verified), at the cost of gross margin (the increased mass-market share dragged gross margin by ~-2.85pp in 2024).
Value chain and value distribution: The upstream consists of agricultural raw materials (konjac refined powder, quail eggs, anchovy, sunflower seeds, potatoes, palm oil, packaging), which broadly rose in price in 2025 with sunflower seeds and others beginning to fall in 2026; in-house production rate has become the cost watershed. Midstream manufacturing retains the highest gross margins (brand manufacturers' gross margins 30–48%), but manufacturing is highly fragmented (industry CR5 only ~15%, tertiary data to be verified). The downstream channel is consolidating dramatically into a duopoly — Mingming Hen Mang (~21,900 stores, 2026H1 revenue RMB 45.00 billion, +60.0%) and Wanchen Group's Haoxianglai (~27,000 stores, 2026H1 revenue RMB 34.84 billion, +54.3%), with CR2 at ~76% (GMV basis). Mass-market channels connect directly with 2,000+ manufacturers at retail prices 20–30% below supermarkets; channel gross margins are only 11–12% but scale is traded for pricing pressure and payment terms imposed on upstream — profit distribution is tilting toward retail terminals, and manufacturers must rely on scale + efficiency + hero SKUs to defend net margins. Yanjin Puzi sits in the midstream "manufacturing + brand" segment: strong bargaining power over upstream (self-supply layout in konjac refined powder/quail eggs/potato granules; konjac gross margin still +1.21pp in 2025 despite the sharp rise in konjac powder prices), moderately weak bargaining power over downstream mass-market channels, but a leading supplier position maintained through multi-category breadth + deep binding via its RMB 350 million equity stake in Mingming Hen Mang Group.
Supply-demand and competitive structure: Demand is driven by mass-market channel penetration into lower-tier markets and healthy hero SKUs (konjac/quail eggs/high-protein) expanding the category, with pricing power anchored by mass-market channels to "value-for-quality." Supply-side manufacturing capacity is ample with abundant OEM/white-label supply; entry barriers are steepening on the channel side (10,000-store supply chains, 48+ warehouses with T+1 delivery, digital systems) rather than manufacturing (the company itself states "entry barriers are relatively low and product iteration cycles are short"). Competitive intensity is high with price wars normalized: in konjac, Weilong (konjac snacks share ~70%) vs. Yanjin vs. Jinzai compete head-to-head; in quail eggs, 2025 price competition drove Jinzai's poultry products to -11.9% (while Yanjin's egg products rose +51% counter-cyclically via Sam's high-traffic channel). Substitution threats come from freshly-made snack formats, tea beverage/braised food cross-over players, and mass-market private labels (Haoxianglai Chaowu/Zhenxuan, Mingming Red Label/Gold Label). The industry is moving from "growth via store openings" to a second half of "single-store efficiency + private label": Wanchen opened a net ~4,100–4,700 stores in 2025 (~9,600 in 2024), average monthly GMV per store of RMB 382,000 remained below 2024's RMB 412,000, and average ticket size fell from RMB 34.35 to RMB 30.39; brokers estimate a store ceiling of 67,000–80,000, while the two leaders have already surpassed 50,000 combined — the store-opening dividend is past its midpoint, and the volume-growth dividend for suppliers is fading at the margin.
Cycles and regulation: The industry is in aggregate maturity, with structural tailwinds (mass-market/health-oriented) coexisting with structural headwinds (supermarket/shelf e-commerce contraction). Leading indicators to watch: net store openings/closure rates of the two mass-market leaders (2026H1: Wanchen net +5,488 stores, closure rate 1.35%; Mingming net +4,457), average monthly GMV per store, and hero-SKU raw material prices (sunflower seeds falling in 2026 → Qiaqia gross margin +5.6pp; konjac refined powder falling from highs). Regulation is advancing on three fronts: GB 7718-2025 and other new labeling rules become mandatory in March 2027 (banning "zero additive" claims, mandatory allergen labeling), raising compliance costs for white labels and favoring leading self-manufacturers; following the mass-market "short-weighting" incidents in August–September 2026, multiple regions launched special metrology rectification campaigns — a short-term hit to channel reputation, a medium-term push toward refinement; and normalized food safety oversight.
Peer benchmarking: See the peer benchmarking table above. Supplemental scale rankings: 2025 revenue of RMB 5.76 billion for Yanjin is below Three Squirrels (RMB 10.19 billion, OEM channel-type) and Weilong (RMB 7.22 billion), and above Qiaqia (RMB 6.57 billion), Jinzai (RMB 2.44 billion) and Ganyuan (RMB 2.10 billion); net profit attributable to parent of RMB 748 million ranks top three in the A-share + HK snack sector, with the sector's best earnings quality (ROE, cash content). The company's industry positioning: a platform-type company in the first tier of manufacturing, forming a duopoly with Weilong in konjac (Yanjin pursues multi-category value-for-money while Weilong pursues single-SKU brand premium), and category upgrade in quail eggs via membership stores such as Sam's Club; share trends — konjac share under pressure as competitors flood in, egg products/seafood share rising, leading supplier share in mass-market channels (caveat: the company has not disclosed the precise mass-market revenue share; "~30% in 2024" is a broker estimate, presented alongside the company's 2023H1 IR disclosure of 17% for reference); moat sources = cost advantage from going one step deeper upstream + multi-category matrix smoothing single-SKU cycles + full-channel positioning (mass-market + membership stores + packaged distribution + overseas).
Generic financial frameworks easily miss the truly decisive variable in this industry: the pace of channel-structure change outpaces category life cycles; a manufacturer's gross margin and growth are determined by "which channel it entered" before "which product it made." Yanjin Puzi has proven this twice over the past five years: the shift from supermarket bulk sales to mass-market + distribution in 2021–2023 (revenue RMB 2.28 → 4.12 billion), and the mass-market + konjac double-hit in 2024–2025 (RMB 4.12 → 5.76 billion); it is now enduring the pain of a third transition — proactively shrinking low-margin e-commerce private label from 2025Q2 (online share 20.1%→21.9%→16.0%→9.5%; 2026H1 revenue -49.3%) and reforming packaged-distribution channels toward large distributors (distributors -11.9%).
Channel ledger: Offline channels grew +16.8% in 2025 and ~+17% in 2026H1 (driven by mass-market + membership stores), while online fell -49.3% in 2026H1 — every RMB 100 million of online revenue contraction drags overall growth by ~1.8pp, but in exchange buys gross margin and expense efficiency (e-commerce gross margin of 34.2% is above offline, but low-margin private label business with negative net contribution after deducting traffic-acquisition costs is being cut). The 2026 revenue slowdown (+2.4% for the first three quarters) is almost entirely explained by the channel transition: if e-commerce stabilizes (narrowing the decline to within -10%) and packaged distribution stops falling, these two items alone could contribute a 3–5pp growth recovery in 2027 — this is the main source of the base-case revenue growth of +5–10%, and the reason "channel-clearing verification" is the top catalyst.
Hero SKU model: The operating logic of the company's "1+6" category brand pyramid is: use hero SKUs (Da Mo Wang sesame-sauce konjac, Danhuang quail eggs, 31° Fresh) to establish category mindshare in high-traffic channels (Sam's Club bestseller list TOP1, top mass-market SKUs), then roll out via the category matrix. A single SKU's life cycle is roughly 2–3 years: konjac scaled up 2023–2025 (+107%) and zeroed out in 2026; egg products built momentum in 2024, raised prices in 2025, and are scaling in 2026 (+50%+), with seafood taking over in 2025–2026 (+30–56%). To judge a manufacturer's sustained growth capability, the core question is whether "the next hero SKU is in the pipeline" — currently in the pipeline: gongcai konjac (launched September 2026), Danhuang soft-boiled quail eggs (Sam's Club new product trend list), Yili co-branded konjac jelly (launching across Mingming Hen Mang's national stores in October 2026), and overseas Mowon (entered channels in nearly 30 countries including Thailand's 7-Eleven; 2025 revenue RMB 171 million, +172%; a provisional -16.6% in 2026H1). The pipeline is stocked but unproven — this is the essence of the "~35% growth option."
Supplier niche in mass-market channels: After the mass-market duopoly shifted to private labels and curated selection pools, suppliers bifurcated into "replaceable white labels" and "deeply bound leading brand owners." Yanjin's defensive items: multi-category supply capability (low single-SKU dependency), RMB 350 million equity stake in Mingming Hen Mang Group, and irreplaceability from co-branding and customized packaging (Yili collaboration); exposed items: largest customer at 30.85% of revenue and receivables concentration at 76.4% — any marginal change in channel terms or rebate policies will directly pierce the financials. Anchors for tracking mass-market channel health: leaders' net openings and closure rates, per-store GMV, private-label revenue share, and supplier payment terms — these four factors determine whether Yanjin's normalized 2027–2028 earnings are a "RMB 700 million+ platform" or a "step down below RMB 600 million."
Overall assessment: Cautiously bullish, confidence 0.60, time horizon 12–18 months. Quality and price stated separately: this is a manufacturing leader with ROIC significantly above its cost of capital, long-positive cash content, and a solid shareholder-return track record, now trading at decade-low valuations; but the unproven nature of the growth-engine transition, the structural squeeze from mass-market channels, and governance overhang mean the recovery is capped and requires verification. Strategically, phased left-side accumulation is advisable, with the January 2027 earnings preannouncement and the April annual report/Q1 report as decision points for adding/exiting: Q4 revenue turning positive + e-commerce decline narrowing to within -10% → turn constructive; Q4 e-commerce still down more than -30% or a jump in largest-customer concentration → acknowledge the bear path.
Key Risk Warnings (presented here; the tracking checklist is in the structured terms): ① Delayed channel adjustment — if e-commerce and packaged distribution clearing drags into H2 2027, the market will reprice the stock as a zero-growth food company, shifting fair value down to RMB 26.6–31.3; ② Largest-customer risk — a 30% order cut by the mass-market leader would drag net profit attributable by ~13%, and complete loss (tail scenario) by ~45%; ③ Cost recurrence — cod/packaging/konjac refined powder staying elevated through 2027; every -1pp of gross margin cuts profit by ~RMB 44 million; ④ Governance discount — if the fairness of Jinjue konjac related-party purchases is substantiated under regulatory inquiry, valuations would take a further 10–15% discount; ⑤ Fading dividend protection — in a downward earnings revision, payout ratio and valuation anchor would shift lower together. If any of these risks materializes, this report's "undervalued" conclusion must be reassessed.
Catalyst alerts: Verification of channel-clearing data (2027-01 preannouncement / 2027-04 annual report), transmission of falling konjac refined powder costs (2026Q4–2027H1), Danhuang Phase III commissioning ramp (2027H1), interim dividend and new buybacks (from 2026-11), mass-market sell-through during the 2027 Spring Festival peak season (2026-12 to 2027-02), and accumulation signals from long-term funds such as the National Social Security Fund at the bottom.
This report is based on the 2026-10-30 closing price (RMB 38.86) and public information as of the report date. Data sources: the company's 2024/2025 annual reports, 2026 semi-annual/Q3 reports, investor relations activity records (2026-09-03, 2026-10-27), ad hoc announcements (2026-10-10 pledge announcement), iiMedia Research/CIC industry data, public disclosures by Wanchen Group and Mingming Hen Mang, and broker research (Guotai Haitong, Dongxing, Minsheng, Huachuang, Zhongtai, etc.).