Profit soars by 20%! Master Kong enhances quality and efficiency, taking a key step in transformation?

How will the management renewal affect Master Kong’s future strategy?

Produced by | Zhongfang Network

Reviewed by | Li Xiaoyan

On March 23, Master Kong Holdings (00322.HK) released its full-year performance for 2025, with total revenue of 79.07 billion yuan, a slight decline of 2.0% year-on-year, ending a consecutive growth trend since 2017; meanwhile, the company’s net profit surged by 19.8% year-on-year to 5.18 billion yuan, with shareholder net profit of 4.5 billion yuan, a year-on-year increase of 20.5%. The overall gross profit margin increased by 1.7 percentage points to 34.8%, presenting a significant profit increase, structural optimization, and highlighted resilience in its annual report. In the context of a slowdown in consumer recovery and intensified industry competition, Master Kong is shifting from a scale-first approach to a quality-first strategy, laying a solid foundation for medium to long-term recovery growth, relying on the rebound of its instant noodles business and the profitability upgrade of its beverage segment, bolstered by management renewal and strategic reboot.

As a national fast-moving consumer goods giant, Master Kong drives its business with instant noodles and beverages, with the two segments contributing over 99% of its revenue. The year 2025 shows a clear structural differentiation, resulting from proactive strategic adjustment and resonance with market cycles. After years of adjustment, the instant noodles segment has successfully emerged from a downward trend, achieving annual revenue of 28.42 billion yuan, a slight increase of 6.93 million yuan year-on-year, ending the continuous decline since 2023 and marking a strategic turnaround. In facing pressures from takeout services and health-driven consumption upgrades, Master Kong focuses on upgrading mid- to high-end products such as container noodles and premium noodles, optimizing its product structure. Coupled with the downward trend in raw material prices, the business gross profit margin improved by 1.1 percentage points to 29.7%, with profitability steadily increasing.

During the mid-term earnings meeting, management revealed that the instant noodles segment had achieved positive revenue in the second half of the year, with mid- to high-end categories recovering first, successfully offsetting the decline in low-end products. This rebound not only validates the effectiveness of the product structure transformation but also consolidates Master Kong’s leading position in the convenience food sector. In the competitive landscape where brands like White Elephant are rising, Master Kong maintains its base and achieves a quality profit increase, providing stable support for the group’s overall performance.

As the primary growth curve, the beverage segment generated revenue of 50.12 billion yuan in 2025, a year-on-year decline of 2.9%, marking the first annual decline since 2017. Tea, juice, and packaged water all experienced varying degrees of decline, becoming the main factors putting short-term pressure on revenue. However, behind this adjustment is Master Kong’s strategic determination to insist on value upgrading and reject low-price competition. In 2024, the company raised prices on its 1L tea beverages, which, while temporarily impacting sales, significantly improved profitability quality. The beverage segment’s gross profit margin increased by 2.2 percentage points year-on-year to 37.5%, with gross profit rising by 570 million yuan and net profit growing by 17.7%, achieving a strategic trade-off of short-term revenue concessions for long-term profitability improvements.

From the perspective of category structure, carbonated and other beverages experienced an opposite growth of 880 million yuan, somewhat offsetting the decline in traditional categories and demonstrating the risk resistance of a diversified product layout. In response to the rise of new segments like sugar-free tea and functional beverages, Master Kong is accelerating its layout of sugar-free product matrices and promoting product innovation iterations. Although facing short-term pains of transitioning between old and new products, this aligns with the long-term trend of health consumption, reserving momentum for the second growth of the beverage segment.

Intensified industry competition and accelerated channel iteration are external factors putting short-term pressure on Master Kong’s revenue. Nongfu Spring’s beverage business revenue has overtaken Master Kong, while emerging brands like Dongpeng and Yuanqi Forest aggressively seize market share, placing traditional beverage giants under dual challenges of innovation and channel transformation. Meanwhile, Master Kong has been continuously optimizing its distributor network over the past two years, streamlining ineffective channels, with the number of distributors dropping to 57,609 in 2025. While the channel optimization may temporarily affect distribution efficiency, it enhances the quality of terminal operations and lays a foundation for refined operations.

Innovation emerges from crisis, and new opportunities arise from change. Master Kong is not passively responding to market changes but is actively pursuing a dual approach of strategic renewal and classic reboot to open up new growth spaces. By the end of 2025, family member Wei Hongcheng will succeed as CEO, marking the end of a decade of professional management. The management team has proposed the “Back to Day 1” entrepreneurial spirit, advocating for efficient agility and a fighting spirit, activating organizational vitality with an entrepreneurial mindset, and enhancing decision-making efficiency and market responsiveness.

On the marketing front, Master Kong has re-launched the classic IP “One More Bottle” after many years, introducing upgraded promotional activities for green tea and fresh green tea. This once-established national beverage strategy combines digital scanning technology upgrades, awakening consumer sentiment, stimulating terminal sales, and avoiding brand value dilution. It balances short-term sales with long-term brand building, becoming an important lever for the recovery of the beverage business. Compared to simple price-cut promotions, this reboot considers the interests of consumers, distributors, and the brand, potentially driving core product sales back to life during the beverage peak season.

On the financial front, Master Kong demonstrates strong operational resilience and cost control capabilities. In 2025, the prices of raw materials like palm oil and PET decreased, combined with product mix optimization and improved operational efficiency, enabling the company to achieve a high-quality transformation with slowed revenue growth and doubled profitability. Against a backdrop of slight revenue decline, net profit growth exceeded 20%, gross profit margin continued to improve, ROE improved in tandem, and cash flow remained robust, providing ample ammunition for channel investment, product research and development, and market expansion. This strategy of exchanging profit for space and quality for growth is more sustainable in the era of stagnant competition in the fast-moving consumer goods industry.

Objectively, Master Kong still faces challenges such as slow innovation pace, aging traditional products, and the pains of channel transformation. The beverage segment’s transformation has not met expectations, and it is experiencing its first revenue decline in nearly a decade, reflecting the difficult exploration of traditional giants adapting to the new consumption era. However, compared to the industry’s general lack of growth, Master Kong has maintained its profitability baseline, optimized its business structure, and activated organizational momentum through proactive adjustments, taking a significant step toward high-quality development.

Looking ahead, the stabilization and rebound of the instant noodles business will continue to contribute stable cash flow. The beverage business, relying on pricing benefits, classic marketing reboot, and new product layout, is expected to gradually emerge from the adjustment period. With the management renewal taking effect, a wolf culture empowering the organization, and improved channel efficiency, Master Kong is expected to return to a growth trajectory with positive revenue in the years 2026-2027.

Shifting from leading by scale to leading by quality, from passive adaptation to proactive transformation, the performance fluctuations of Master Kong in 2025 are a necessary path for traditional fast-moving consumer giants to upgrade and transform. Short-term revenue adjustments do not hinder long-term resilience, significant improvements in profitability demonstrate core competitiveness, and the renewal of classic brands combined with strategic determination indicates that Master Kong is returning to a growth track with a more agile posture and stronger vitality.