Haoxianglai: The simplest business that earns the maximum profits for its shareholders.
By | FAN Liang
Edited by | ZHANG Fan
Not long ago, the Fortune China 500 list was released. Ranking the listed enterprises by ROE (denominated in US dollars), Fujian Wanchen (88%) outperformed Pop Mart (56%) and took the first place.
ROE (Return on Equity) measures how much profit an enterprise can earn from every 1 yuan of net assets in the current year. To the public, Fujian Wanchen is a relatively unfamiliar name, but its bulk snack store brand "Haoxianglai" has spread all over the streets and lanes. Starting from the enoki mushroom business, Wanchen transformed to the bulk snack store business in just a few years, boosting its revenue from 500 million yuan to 50 billion yuan, and the capital market has also brought a 20-fold return in 4 years.
However, the bulk snack store business is essentially a business with low customer unit price and low profit margin. How on earth did Wanchen Group achieve such a high ROE? Can this high ROE be sustained?
Business Features of High Turnover
According to the traditional DuPont analysis, ROE can be decomposed as:
ROE = Net Profit / Shareholders' Equity = Net Profit Margin × Asset Turnover × Equity Multiplier. When there is minority shareholders' equity, that is, the listed company only holds part of the equity of its subsidiaries, the calibers of net profit attributable to shareholders of the parent company and shareholders' equity attributable to shareholders of the parent company shall also be adopted.
Wanchen Group's position in the bulk snack industry chain lies in supply chain management and brand operation. Its stores are mainly expanded through franchisees, and the company is responsible for product selection and supply. Since most of the products come from well-known consumer brands, the terminal selling price is limited, and sufficient profit margin must be reserved for franchisees. In 2025, the gross profit margin of Wanchen Group's snack business was only 12.32%, the comprehensive net profit margin was 4.71%, and the corresponding net profit margin attributable to the parent company was only about 2.61%. Therefore, the profit margin is not the main source of high ROE.
In the case of limited profit margin, the key to explaining Wanchen's high ROE turns to asset turnover rate and asset-liability ratio.
For traditional manufacturing companies, a large amount of funds are often stranded in the purchase of plant and equipment and stockpiling (inventory). After the products are sold, it is usually difficult to collect payment quickly, which further increases the capital burden of the enterprise and reduces the use efficiency of invested capital. In 2025, the average inventory turnover days of China's manufacturing enterprises above designated size was 22 days, and the days for accounts receivable collection was about 69 days.
However, since Wanchen Group and Mingmangmangmang mainly rely on outsourcing for their products, they do not need to invest a large amount of fixed assets like the traditional food manufacturing industry. What deserves more attention is the inventory turnover and payment collection speed:
The inventory turnover days of Wanchen Group in 2025 was 18 days, and the accounts receivable turnover days was only 0.11 days. The inventory turnover days of Mingmangmangmang was about 12.56 days, and the accounts receivable turnover days was 0.44 days. Furthermore, compared with the retail industry, the inventory turnover days of CITIC supermarket and convenience store index is about 52 days, and the accounts receivable turnover days is about 5 days.
Extremely low inventory turnover and accounts receivable turnover days mean that Wanchen Group only needs a small amount of capital to stock up, and can collect payment immediately after the goods are sold, which greatly reduces the occupation of capital.
Generally speaking, this high-turnover business model is not only the embodiment of the excellent operation capability of snack brands such as Wanchen Group and Mingmangmangmang, but also the foundation for the long-term operation of bulk snack stores: continuously track the changes of consumer demand, and timely meet the demand through small-batch and flexible supply.
Debt Financing Oriented in the Past with Low ROE Denominator
However, high turnover still cannot fully explain Wanchen's high ROE. The ROE of Mingmangmangmang is about 28%. The net profit margin and turnover rate of the two are similar, and the gap mainly comes from the capital structure. In 2025, the asset-liability ratio of Wanchen Group reached 74.61%, while that of Mingmangmangmang was only 35.84%, so Wanchen's equity multiplier was significantly higher.
In addition, Wanchen's bulk snack business is not entirely held by the listed company. When calculating the equity multiplier, minority shareholders' equity needs to be excluded from shareholders' equity, and only shareholders' equity attributable to the parent company shall be retained, which will further reduce the denominator of ROE. Therefore, in general, Wanchen Group's ultra-high ROE mainly comes from high turnover, high debt ratio and low equity base attributable to the parent company.
Wanchen's relatively high debt ratio is related to its financing method. Since the layout of bulk snack business in 2022, the company only carried out a private placement of 200 million yuan in 2024. Its daily operation and mergers and acquisitions rely more on loans and extending the payment period of accounts payable; while Mingmangmangmang has adopted equity financing for a long time. As a listed company, Wanchen has a natural loan advantage compared with Mingmangmangmang, which was unlisted and lacked collateral at that time.
However, there is still great uncertainty about whether Wanchen can maintain the current ROE level for a long time. With the continuous accumulation of profits, the net assets attributable to the parent company will increase naturally; if the company completes the H-share issuance and raises equity funds subsequently, under other unchanged conditions, both the equity multiplier and ROE may decline.
Therefore, in the future, we need to focus on observing the company's capital allocation: whether to increase dividends and maintain a certain leverage, or retain profits, repay loans and continue to acquire minority equity. But even if the company's equity multiplier declines in the future, making Wanchen's ROE gradually close to that of Mingmangmangmang, as long as the high turnover and profitability can be maintained, its ROE may still stay at a relatively high level.
More Profits Are Returning to the Shareholders of Listed Companies
Wanchen's layout in the bulk snack sector can be summarized as the actual controller hatches part of the business off the balance sheet first, then the listed company consolidates the statements, then rapidly expands the scale through extensional mergers and acquisitions, and cooperates with the acquisition of minority equity and the transfer of existing shares to bind the core personnel of the acquired brands. Lu Xiaochan was initially hatched off the balance sheet by the actual controller, while Haoxianglai, Laiyoupin, Yadi Yadi and Laopo Daren were obtained through mergers and acquisitions.
Since 2024, Wanchen's original shareholders have successively transferred the shares of the listed company to Peng Dejian, Zhou Peng and Zhang Haiguo. All three of them come from the founding or core teams of the acquired brands. As of the beginning of June 2026, they have entered the top ten shareholders of Wanchen, among whom Peng Dejian and Zhou Peng have entrusted their voting rights to the actual controller Wang Zening.
These transactions have two implications: First, the acquirees become shareholders of the listed company and continue to participate in the operation, so as to strengthen the interest binding; second, part of the minority equity of subsidiaries is recovered, so that more profits of the bulk snack business belong to the shareholders of the listed company.
In the initial stage, Wanchen did not acquire all the equity of relevant snack brands, so part of the net assets of the subsidiaries was included in the minority shareholders' equity, and the corresponding profits were also included in the minority profit and loss. Through the subsequent acquisition of minority equity, part of the profits that originally belonged to minority shareholders have been successively converted into profits attributable to the parent company.
Specifically, Peng Dejian and Zhou Peng transferred the minority equity of subsidiaries to the listed company, and they transferred the shares of the listed company from the original shareholders. Although the relevant announcements do not clearly define the two as related arrangements, the consideration for their transfer of the listed company's shares is roughly matched with the income from the sale of minority equity, and the share transfer price has a significant discount compared with the secondary market price in the same period. From the transaction results, this series of arrangements reflects the overall idea of "exiting the shareholding of subsidiaries and turning to holding the shares of the listed company". In contrast, the price and scale of Zhang Haiguo's share transfer are quite different from the former two, which is closer to a separate equity interest binding arrangement.
In addition, Wanchen Group's operation similar to "exchanging the shares of the listed company for the equity of subsidiaries" is completed through the transfer of existing shares by the actual controller, rather than direct issuance. The net profit attributable to the parent company increases, but the total share capital does not increase. The EPS of Wanchen Group's shareholders is further improved, which does not harm the interests of shareholders. It is a relatively clever arrangement.
According to the financial report disclosure, the proportion of minority profit and loss in Wanchen Group's net profit has dropped from 50.65% in 2024 to about 35% in the first quarter of 2026. The remaining unrecovered minority equity is mainly held by the actual controller Wang Zening. If the company continues the previous integration path, it is not excluded that it will continue to acquire it into the listed company in the future, but the acquisition method may be completed through additional issuance or the company's own funds.
After Store Expansion, What Drives Growth?
In the past few years, Wanchen's growth mainly relied on the rapid expansion of stores. By the end of 2025, Wanchen and Mingmangmangmang had about 18,000 and 22,000 stores respectively, with a combined domestic market share of over 75%. According to the current progress of Mingmangmangmang breaking through 30,000 stores, it is expected that by the end of 2026, the total number of stores of the two giants will rise to 55,000 to 60,000.
Since about 60% of the stores of the two companies are distributed in the sinking market, this volume is approaching the physical ceiling of the industry. Based on the total number of 55,000 stores and 80% of the industry market share, it is estimated that there are about 42,000 snack stores in the domestic third-tier and below markets. Calculated based on about 18,000 towns and townships across the country, it is equivalent to an average of 2.3 stores per town.
Then based on the calculation of 15,200 people per town and about 4.5 million yuan of annual GMV per store, the per capita annual consumption of local residents needs to reach 600 yuan (accounting for more than 5% of the per capita food, tobacco and alcohol consumption expenditure of China's urban residents in 2025). Although this calculation is rough, it reflects that the sinking market has basically bid farewell to the era of "blindly expanding territory" that can be copied without thinking. The expansion of the existing store base will naturally slow down the store growth rate of the industry in the future.
In order to find new growth poles, Wanchen is exploring two new paths: First, develop customized and private brand products to increase the gross profit margin; second, introduce low-temperature short-shelf-life beverages, frozen foods and IP-licensed products to increase the revenue of each store. However, these attempts have not been significantly verified in the financial statements at present, and the company's total revenue is still driven by new store openings. Before the formation of the second growth curve, the capital market mostly holds a wait-and-see attitude towards Wanchen's subsequent profit growth rate and valuation premium.
Therefore, the indicators for judging Wanchen's growth in the future must be switched from "total number of stores" to same-store sales growth rate, store closure rate, private brand revenue proportion and gross profit margin of new categories. If the subsequent store growth rate slows down and the above same-store efficiency indicators can continue to improve, the company can still rely on single-store efficiency and profit margin to support growth; on the contrary, if the store opening slows down and the same-store efficiency cannot be improved, the logic of high revenue and profit growth will be difficult to maintain.
From What Perspective Should We Evaluate Wanchen?
Driven by the high-growth logic of bulk snacks, Wanchen's stock price has risen by more than 15 times from 2023 to 2025. Entering 2026, even against the background of corrections in sectors such as technology stocks, Wanchen still outperformed the market and rose against the trend within the year. After the business brings significant returns, the current focus of the game in the market is: whether the current valuation has overdrawn the future growth space.
At present, the static P/E ratios of Wanchen and Mingmangmangmang are both around 32 times; calculated based on the net profit attributable to the parent company of Wind's consensus forecast in 2026, the dynamic P/E ratios of the two are 18.3 times and 20.59 times respectively. This relatively low dynamic P/E ratio reflects the capital market's concern that the chain stores will "peak and slow down".
Similar concerns have already emerged in other consumer enterprises with tens of thousands of stores. For example, the static valuations of Mixue Group (with a revenue growth rate of about 35% in 2025) and Guming (with a growth rate of about 46%) have fallen back to about 13 times and 16 times respectively. This shows that the core of market pricing is no longer the historical high growth rate, but how to maintain growth after the stores reach the bottleneck.
However, even if the future growth rate slows down, Wanchen's asset-light and ultra-high-turnover business characteristics also provide it with extremely strong self-sufficiency and potential dividend capacity. Based on the current dynamic P/E ratio of 18.3 times, the company's potential maximum dividend yield can exceed 5%. If Wanchen's capital demand (such as acquisition and plant construction) gradually decreases in the future and the payout ratio is increased, its potential dividend yield will be very attractive.
Referring to the 5% to 7% dividend yield of high-dividend consumer stocks such as Shuanghui Development, Wanchen has the full potential to transition from a "high-growth stock" to a "dividend stock" in the medium and long term. Therefore, Wanchen can be examined from two logics at present: on the upside, whether the penetration of private brands and new categories in single stores can take over the dividend of store opening and break the single-store ceiling; on the downside, after the growth rate slows down, whether its excellent cash flow and high-turnover characteristics can be converted into high dividends is the key to supporting its valuation.
*Disclaimer:
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