Scan the QR code in the image to register

On March 22, Master Kong Holdings released its 2020 financial report data.

The report shows that in 2020, Master Kong's revenue was 67.618 billion yuan, a year-on-year increase of 9.10%; net profit attributable to shareholders was 4.062 billion yuan, a year-on-year increase of 21.95%.

Regarding the macro market, Master Kong stated in the annual report that in the first half of 2020, demand for instant noodles increased due to the pandemic, and the market gradually returned to normal in the second half. The beverage industry gradually recovered after a decline in demand in the first half due to the pandemic.

The new normal of the pandemic also accelerated the transformation of the business environment, such as increased demand for indoor consumption scenarios, the rise of O2O models and community group buying, and the trend of consumption polarization. These changes have brought new challenges and opportunities.

-01-

Instant Noodles: Revenue 29.510 Billion Yuan

Steadily Ranked First in the Market

According to the announcement, in 2020, Master Kong's instant noodle revenue was 29.510 billion yuan, a year-on-year increase of 16.64%, accounting for 43.64% of the group's total revenue. During the period, due to product upgrades and production optimization, the gross margin of instant noodles increased by 0.29 percentage points year-on-year to 29.30%.

According to Nielsen data, in 2020, the overall instant noodle industry saw a year-on-year sales volume increase of 0.1% and sales revenue increase of 4.7%. During the period, Master Kong's market share by volume was 43.7%, and by sales value was 46.3%, with a continuous upward trend, firmly ranking first in the market.

In 2020, during the Spring Festival pandemic, the instant noodle category restarted production at the earliest opportunity, using big data to solve production and sales coordination, logistics and transportation, and raw material supply issues, prioritizing meeting people's livelihood needs while also offering products with multiple flavors, specifications, and price points. After the pandemic, in the new normal, demand for home consumption grew, and online business surged.

In terms of channels, the business performed well across all channels. During the pandemic, the business prioritized ensuring supply to e-commerce and modern trade channels to ensure products reached consumers in the shortest possible time. It focused on strengthening inventory health management and used system tools to improve distribution efficiency, achieving win-win cooperation with channel partners.

High-priced and premium noodles are the core products that Master Kong aims to consolidate first, meeting consumer needs with multiple flavors and specifications. After the pandemic outbreak, Master Kong ensured the supply of core products at the earliest opportunity, and after supply gradually stabilized, supplemented with products of multiple flavors and specifications to meet the diverse needs of consumers.

Due to the pandemic leading to increased indoor consumption and a surge in demand for high cost-performance products, sales of bagged noodles and large-portion products grew particularly significantly.

-02-

Beverages: Revenue 37.280 Billion Yuan

Year-on-Year Increase of 4.72%

In 2020, Master Kong's beverage business achieved overall revenue of 37.280 billion yuan, a year-on-year increase of 4.72%, accounting for 55.13% of the group's total revenue.

According to Nielsen market share data, in 2020, China's beverage industry saw a year-on-year decline of 6.2% in sales volume and 7.1% in sales value.

Master Kong's full-year beverage business, including ready-to-drink tea (including milk tea), had a sales volume market share of 43.6%, firmly ranking first in the market. Juice sales market share was 17.3%, ranking second in the market. Packaged water sales market share was 5.7%. Ready-to-drink coffee sales value market share was 12.0%, ranking second in the market.

It is understood that Master Kong's beverage business continues to focus on core categories, and during the pandemic, it focused on developing new retail channels and emphasized online communication methods to reach consumers, in response to the limited mobility of terminal consumers. After the pandemic eased, sales gradually recovered.

Master Kong continues to promote product structure adjustment. In addition to focusing on core categories to meet mass consumer demand, it also launched high-end new products in response to post-pandemic consumption upgrades and nutritional health needs.

-03-

Outlook for 2021

Embracing Opportunities and Challenges Amid the Pandemic

Master Kong stated in its annual report that in 2021, the overall business environment is expected to face both opportunities and challenges. The steady recovery and growth of China's overall economy and the diversification of consumer demand provide Master Kong with opportunities to better serve consumers.

At the same time, uncertainties in the global pandemic and fluctuations in international raw material prices also bring challenges and risks to the group's operations.

In 2021, Master Kong will continue its consistent strategy of "consolidation, innovation, and development," continuously strengthening product strength, brand strength, and channel strength. It will continue to leverage its core competitiveness to better serve urbanized consumers, middle-class consumers, and new rural consumers' diverse needs for a better life.