This article first appeared in The Edge Malaysia Weekly on August 12, 2024 - August 18, 2024
AS Hong Kong-listed Want Want China Holdings Ltd looks to deepen its presence in Southeast Asia, either by setting up another manufacturing plant or subsidiary, Malaysia is very much on the rice cracker and beverage group’s radar.
“Malaysia is an important market to us; investing in Malaysia is a gateway to the local market and to the greater halal market. At the current moment, we are still evaluating the best way to tap this market besides the current trade,” Want Want’s spokesperson says via email in response to questions from The Edge.
Want Want, which is headquartered in Shanghai, is well known for its rice crackers and is considered a market leader in this segment. The rice crackers are neatly wrapped in plastics printed with a picture of its mascot, a laughing boy known as Wang Jai (Íú×Ð) or Hot-Kid, who can be found on most of Want Want’s product packaging.
Want Want’s factory in Vietnam — its first manufacturing facility outside China and Taiwan — commenced operations in 2022. Aside from that, within the region, it has also set up subsidiaries in Thailand, Singapore and Indonesia.
The plant, located in the Tien Giang province in Southern Vietnam, has the capacity to produce its popular rice crackers, fried snacks, Baby Mum Mum products, QQ Gummies and OPAO drinks, among others. The output value of the existing production lines is about US$150 million (RM671.16 million).
“However, the above-mentioned products are just a limited selection that we plan to launch in the Southeast Asia market. With the growing economy and young booming population, we expect this market to bring great potential to Want Want’s growth,” the spokesperson explains.
On its subsidiaries in Thailand and Indonesia, the spokesperson explains that they are part of Want Want’s strategy to enhance its market penetration and streamline the distribution of its products in these key Southeast Asian markets.
“This strategic move allows the group to better understand and cater to local consumer preferences, ensuring product relevance and competitiveness. Additionally, local subsidiaries enable quicker response times to market demands. This expansion aligns with Want Want’s goal of becoming a dominant player in the regional food and beverage industry,” the spokesperson adds.
According to its annual report for the financial year ended March 31, 2024 (FY2024), the units in Thailand and Indonesia, set up in 2019 and 2022 respectively, are trading companies while the subsidiaries in Singapore are for the trading of food and beverage (F&B), and investment holding. It is worth noting that Want Want was listed on the Singapore Stock Exchange from 1996 to 2007.
“The Malaysian market has always been a market that Want Want values and takes very seriously. As of this year, Want Want has [been in] the Malaysian market for more than 20 years. After so many years of intensive cultivation, we have gained a certain visibility and market share in the rice crackers and Baby Bites rice crackers market.
“Now, we would love to introduce more snack products to consumers through the trust and love of the Want Want brand among Malaysian consumers. In the future, we will continue to make Want Want products available in all sales channels in Malaysia, so that more consumers can buy and try our classic products and new products, and gradually become a brand that every Malaysian knows and loves,” the spokesperson says.
On what Want Want looks for when investing abroad, the group says many factors come into play including the stability of the government and its support, tax incentives, proximity to the consumer market, production costs, labour supply and the availability of raw materials.
“When considering a location, we are not just serving its local market; we wish to cover the markets of the surrounding countries. Beside the offices in Thailand and Indonesia, we also have offices in the US and Europe; our goal is to make the Want Want brand recognisable all over the globe,” the spokesperson says.
Having secured multiple halal certifications from reputable authorities such as Shandong Halal, ARA, MUI, Shanxi Halal and Jakim, Want Want says it is well-positioned to offer products that adhere to strict halal standards.
The halal certifications underscore Want Want’s commitment to inclusivity and meeting the diverse dietary needs of its global customer base, including catering to the growing demand in Indonesia, Malaysia and the broader Middle East markets. “This strategic move aims to strengthen the company’s market presence and build trust with Muslim consumers globally,” the spokesperson adds.
Want Want was founded in Taiwan in 1962. In 1983, it collaborated with Japanese confectioner Iwatsuka Confectionery Co Ltd to develop a rice cracker market in Taiwan.
The group set up its first factory in China in 1992, in Hunan, and now has 34 production bases in the country. It went on to be listed on the Singapore Stock Exchange in 1996 and diversified into the hospital, hotel and property businesses and other investments. However, it delisted from Singapore in 2007 and underwent a restructuring. The snack food and beverage business was subsequently relisted in Hong Kong the following year.
The group’s chairperson and CEO Tsai Eng-Meng is credited with growing Want Want from a rice cracker company into a diversified global F&B player. He joined the family business in 1977 and succeeded his father to become the group’s chairman in April 1987.
Tsai is also Want Want’s largest shareholder with 53.68% as at March 31, 2024.
Although it started out as a rice cracker manufacturer, Want Want’s bestseller in China is its Hot-Kid milk-flavoured drink. This product is not available in Malaysia but the group is working on bringing it in.
“The bestselling products in each country are slightly different, depending on the country’s culture, eating style, food tastes, snack consumption habits and import barriers. Before entering overseas markets, we will analyse the market and select the most suitable products for each country,” the spokesperson says.
Most of its revenue is still derived from China. For FY2024, revenue from outside China accounted for a mid-single-digit percentage of the group’s turnover. Of the revenue from outside China, 70% came from Asia.
For FY2024, Want Want reported an 18.36% rise in net profit to RMB3.99 billion (RM2.5 billion) on revenue growth of 2.87% to RMB23.59 billion.
For the year, its gross profit margin expanded by 2.7 percentage points to 46.6% from 43.9% the previous year, mainly due to lower costs of certain key ingredients and packaging materials, and the optimisation of production labour strategies. The improvement in gross profit margin, cost management and lower income tax rate contributed to the jump in net profit.
For FY2024, the rice cracker and snack food segments contributed 49% of the group’s revenue while the dairy product and beverage segment contributed 51%.
Want Want paid out RMB2.89 billion in dividends, working out to a payout ratio of 70%.
As at end-March 2024, the company was in a net cash position, registering a net gearing ratio of -0.65 times compared with -0.57 times a year ago.
On its outlook for FY2025, its spokesperson says: “The group’s revenue has grown at a compound annual growth rate of about a mid-single-digit per cent over the past five years; we hope we could achieve better growth in the next three to five years.”
On its long-term vision, the spokesperson says the group will continue to deepen its presence overseas. “Through diversified marketing and promotion, we will strive to increase the recognition and product exposure of the Want Want brand in overseas markets. We hope that in the next three to five years, the overseas market will achieve breakthrough growth.”
Shares in Want Want have risen 1.6% year to date to close at HK$4.80 per share last Thursday, valuing the group at HK$56.7 billion (RM32.6 billion).
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