Analysis of the Pull Effect of Master Kong's Hot Braised Business on Gross Margin

According to my search and analysis, regarding the pulling effect of Master Kong’s hot braised business on the overall gross margin, the following is a detailed analysis:

• Gross margin reached
  30.86%
  , an increase of
  1.45 percentage points
  from the previous year [1]
• The interim gross margin even rose to
  34.5%
  , an increase of
  1.9 percentage points
  over the same period [2]
• The improvement in gross margin was mainly driven by factors such as
  decline in sugar and palm oil prices
  ,
  continuous optimization of product mix
  , and
  product upgrade price increases
  [1][2]

Although there is a

in public information, based on industry characteristics and company strategies, the following analysis can be carried out:

• The hot braised series belongs to the
  mid-to-high-end product line
  , and its pricing is usually higher than basic products such as traditional braised beef noodles
• According to the image information searched, the hot braised series products performed well in 2024 and made positive contributions to revenue and profit
• The upgrade of product structure directly promotes the
  improvement of overall gross margin

• As a new category, the hot braised series has
  differentiated competitive advantages
• The
  pricing power
  of new products is relatively strong, enabling
  product upgrade price increases
• This directly contributed to the improvement of gross margin

• The decline in raw material prices (sugar, palm oil) provided
  cost-side support
  for the improvement of gross margin
• If hot braised products use relatively stable raw material prices, cost control is relatively good

1. Product mix upgrade
   : The proportion of mid-to-high-end products increases, optimizing the revenue structure
2. Enhanced pricing power
   : New categories provide better gross margin space
3. Synergistic effect
   : Driving the value improvement of the overall product line

that since Master Kong has not separately disclosed the financial data of the hot braised business, it is impossible to accurately calculate its specific contribution ratio to the overall gross margin. However, from the company’s overall gross margin increase of 1.45 percentage points, product structure optimization (mid-to-high-end products including the hot braised series) has indeed played an important role in improving the gross margin.

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[1] Master Kong (00322) gross margin rose to 30.86% last year - Yahoo Finance (https://hk.finance.yahoo.com/news/康師傅-00322-去年毛利率提高至30-86-090241784.html)
[2] Master Kong’s interim profit wins with two words: Price increase - Yahoo Finance (https://hk.finance.yahoo.com/news/康師傅-中期盈利贏在兩個字-加價-230000258.html)