According to Zhito Finance APP, China International Capital Corporation released a Research Report stating that the snack wholesale channel will develop rapidly from 2021 to 2024, with significant expansion space expected in the medium term. Currently, the domestic discount format is still undergoing iteration, and it is expected that offline community discount formats will gradually expand from strictly snack categories to compound categories, with penetration rates comparable to overseas Developed Markets likely reaching 15%-20%. Maintain the profit forecast and rating for the Leisure snack Industry covered stocks.

China International Capital Corporation's main views are as follows:

After capital intervention in 2021-2022, stores rapidly expanded, and market consolidation began accelerating in 2023.

Snack categories have a high frequency of consumption and a relatively low average transaction value, with stable demand. The snack wholesale channel has a significant pricing advantage over traditional offline channels by removing intermediate Dealers. In 2021, the snack wholesale industry accelerated its development with the push of capital, growing to about 0.0025 million stores by the end of 2021, exceeding 0.01 million by the end of 2022, and reaching about 0.025 million by the end of 2023. We estimate that by the end of 2024, there will be 0.035-0.04 million stores, with an estimated corresponding market retail value of nearly 140 billion yuan based on an average annual sales volume of approximately 4 million yuan per store.

Market consolidation will accelerate from 2023 to 2024, with both strong groups surpassing 10,000 stores by the end of 3Q24.

Wancheng Group successively integrated several leading brands such as Haoxiancai and Laiyoupin from the end of 2022 to 2023; in November 2023, the two leading brands "Snacks are Busy" and "Zhao Yiming" announced a strategic merger; by the end of October 2024, Three Squirrels Inc. announced plans to invest in Ailingshi, and Ailingshi brand will accelerate the integration of some regional brands in 4Q24. By the end of 3Q24, both strong groups have surpassed 0.01 million stores. We believe the advantages of leading brands include capital, purchasing scale, Logistics efficiency, and first-mover store locations.

The mid-term snack wholesale stores are expected to continue expanding. Currently, the Community discount format is continuously iterating, with a penetration rate that could reach 15%-20%, comparable to overseas Developed Markets.

By estimating the store density in existing mature markets along with the purchasing power coefficients of various regions, the mid-term opening space for the snack wholesale industry is about 0.07 million stores. Currently, the domestic discount model is still iterating, and it is expected that offline Community discount formats will gradually expand from snack vertical categories to composite categories.

Currently, the industry includes offline discount supermarkets (such as comprehensive discount supermarkets Like A, and traditional supermarkets transforming into soft discount or a mix of hard and soft discounts (like Hao Te Mai, Hi Te Gou, Ai Zhe Kou, etc.), while snack wholesale stores are expanding their categories into discount supermarket formats (such as Zero Snack, Chacha Food, Wanchen Qilai Premium, etc.).

Profit forecasting and valuation: Maintain profit forecasts and ratings for covered stocks in the Leisure snack industry.

It is recommended to pay attention to Three Squirrels Inc. (300783.SZ) and Wanchen Group (300972.SZ), which have already laid out in snack wholesale and Community discount supermarkets. Additionally, it's advisable to monitor fast feedback organizations with diverse channels and supply chain advantages, such as Yanker Shop Food (002847.SZ), Weilong Delicious (09985), Ganyuan Foods (002991.SZ), Jinzai Food Group (003000.SZ), and Chacha Food (002557.SZ).

Considering the industry's valuation increase during the peak season before the Spring Festival and the complete channel layout of Yanker, the Target Price of Yanker Shop Food is raised by nearly 10% to 67 yuan, corresponding to about 23 times P/E in 2025, with an 8.1% upside.

Risk warning: Industry competition is intensifying, store profitability has deteriorated; poor management of franchise stores; Food Safety.