Weilong's Growth Slows as Vegetable Snacks Carry the Mix and Marketing Eats Margin

Weilong's H1 2026: Vegetable Snacks Carry the Top Line

Chinese snack maker Weilong Delicious posted a slower first half. Revenue rose 6.7% year on year to RMB3.715 billion, net profit rose 4.0% to RMB766 million, and net margin eased to 20.6% from 21.1%. That is a clear cooling from the 18.5% growth in both revenue and profit recorded in the first half of 2025.

Growth is now heavily reliant on vegetable-based products. Revenue from the segment that includes konjac snacks and seaweed lines rose 15.8% to RMB2.441 billion, adding RMB332 million, while seasoned flour products—the legacy spicy strip business—fell 9.8% and reduced revenue by RMB129 million. Vegetable products reached 65.7% of total revenue, up from 60.5%, while seasoned flour products dropped to 31.8%. Without the vegetable-product increase, total revenue would have declined. Offline sales still made up 87% of revenue but grew only 2.7%; WeiLong ended June with 1,637 distributors, just four more than at end-2025.

Gross margin recovered to 47.8% from 47.2%, even though the lower-margin vegetable category took a larger share of sales. The company attributed the improvement to supply-chain cost reduction and efficiency, with lower konjac raw-material prices helping while packaging-material and oil costs rose. Operating profit still fell 3.3% to RMB918 million because the production-side gains were absorbed by brand promotion and channel spending. The board proposed an interim and special dividend of RMB0.28 per share, totaling about RMB681 million and equivalent to nearly 90% of first-half net profit.

Why Weilong's Margin Recovery Didn't Lift Operating Profit

A within-category margin win at Weilong

At first glance, the margin recovery looks mixed because the product with lower gross margin—vegetable products at 47.1% versus seasoned flour at 48.9%—became a bigger share of sales. That mix shift should have dragged overall profitability lower. Instead, overall gross margin rose to 47.8%, which means the improvement came within each product category rather than from selling a richer mix. Huatai Securities attributes part of the gain to lower konjac raw-material prices, while higher packaging and oil costs partly offset the benefit. This is a genuine cost-side improvement, but it did not flow through to operating profit.

Where the RMB133 million gross profit gain went

Gross profit increased by RMB133 million, yet operating profit fell by RMB31 million to RMB918 million and operating margin narrowed to 24.7% from 27.2%. The gap is the cost of maintaining growth: WeiLong spent the production and procurement gains on branding and channel investment. That spending has not yet produced an acceleration. Offline revenue, the core of the business at 87% of sales, grew only 2.7%, and the distributor network barely expanded. At the same time, two major customers contribute about 14% and 13% of revenue respectively, so the top accounts hold meaningful bargaining power.

The 80% dividend floor and the capacity question

The proposed payout—about 90% of half-year profit—and the plan to distribute at least 80% of attributable annual profit from 2026 through 2028 are backed by a strong balance sheet: cash and fixed deposits of about RMB7.12 billion minus RMB1.76 billion of borrowings leaves more than RMB5.3 billion in net cash. The decision also reflects the capacity picture. Designed capacity expanded 25.2% while utilization fell from 79.0% to 74.6%, so the company can return more profit to shareholders rather than retain cash for an expansion that has not yet been absorbed. The unresolved point is whether WeiLong has enough product breadth to fill that capacity—new sesame-paste and three other flavors are only starting online trials.

What Weilong's Next Results Need to Prove

For investors and analysts, the first-half report sets up specific checks for the next earnings update:

• Gross margin durability: The 47.1% vegetable-product gross margin benefited from lower konjac raw-material costs. If those input costs normalize, WeiLong needs to show that the stated supply-chain savings and cost controls hold; otherwise the 24.7% operating margin is the more relevant baseline.
• Offline productivity versus customer concentration: With only four net new distributors and 2.7% offline growth, second-half acceleration must come from existing accounts—especially the two customers already supplying about 27% of revenue. A further increase in that concentration would likely strengthen buyer bargaining power.
• Capacity and new flavors: Utilization fell to 74.6% while designed capacity rose 25.2%. The online trial of the sesame-paste flavor and three new flavors is the clearest test of whether new products can absorb capacity without another costly channel push.
• Shareholder return baseline: After the near-90% interim and special payout, the 2026-2028 policy commits to at least 80% of annual attributable profit. Use that—and the more than RMB5.3 billion net cash position—as the benchmark for distribution expectations.