Weilong Delicious, the undisputed champion of China’s spicy snack market, recently unveiled an annual report that should have been cause for celebration. For the 2025 fiscal year, the company posted record-breaking revenue of 7.224 billion RMB and a net profit jump of over 33%. Yet, instead of a rally, the Hong Kong-listed firm saw its stock price crater by nearly 10%, a stark reflection of the widening chasm between the company’s accounting books and investor confidence.
Since its much-hyped 2022 debut, the ‘King of Latiao’—referring to the ubiquitous spicy wheat-flour strips—has struggled to escape a downward trajectory. The stock has spent the better part of three years languishing below its IPO price. While the company has successfully pivoted from its traditional spicy strips to a second growth engine in 'vegetable products' like konjac snacks, the market remains unconvinced that Weilong can maintain its dominance in an increasingly health-conscious and crowded landscape.
This skepticism is rooted in the perceived 'original sin' of the company’s product line: a reliance on chemical additives and heavy seasoning. As Chinese consumers pivot toward organic and high-nutritional-value snacks, Weilong’s additive-laden formula is becoming a brand liability. A recent forced recall of its products in Japan due to the presence of TBHQ, a prohibited antioxidant, has only exacerbated fears that the company’s manufacturing standards are out of step with global health trends.
Competition is also mounting in the once-lucrative konjac sector. What was once a blue ocean for Weilong has turned into a brutal price war, with over thirty major snack rivals, including Yanjin Shupu and Three Squirrels, launching aggressive copycat products. This saturation has squeezed margins and forced Weilong into a defensive posture, even as raw material costs for konjac continue to climb.
Perhaps most damaging to investor sentiment is the company’s governance and capital allocation strategy. Despite a 933% explosion in short-term debt, which management attributes to 'urgent inventory needs,' the company continues to distribute massive dividends. Over 60% of profits were paid out last year, with the lion's share of approximately 660 million RMB going directly into the pockets of the Liu family founders, who retain a nearly 80% stake in the firm.
Furthermore, the optics of executive compensation have raised eyebrows across the secondary market. While ordinary shareholders watch their holdings lose value, family members in executive roles continue to draw salaries in the tens of millions of RMB. This disconnect suggests a corporate culture more focused on personal wealth extraction than on the R&D and innovation necessary to future-proof the brand against the rising tide of healthy living.