China Pet Holdings (002891): Homeopathic and Expected Performance Release

China Pet Holdings (002891): Homeopathic and Expected Performance Release

Follow the trend and focus on the domestic market.

In the past three years, the company’s business has further focused on the domestic market and gradually completed the transition from export OEM to independent brand sales. The proportion of internal business in the next five years is expected to exceed 50%.

We believe that under the background of the rapid increase of domestic market demand and the continuous improvement of regulatory policies, high-quality domestic brands will usher in a golden period of development. The company focuses on the domestic market and builds independent brands is the correct choice to comply with industry trends.

Product + channel + brand strategy together create the prototype of a platform-based enterprise.

At the stage where the actual number of pet-raising people is driving the development of the industry, judging platform companies are trying to stand out.

In terms of the company’s product structure, while ensuring the steady development of snacks and canned food, it vigorously develops high-margin categories-pet dry food, and builds a full-category product structure of snacks + canned foods + staple foods. In terms of channels, it effectively identifies the current competitive situation where channels are king.In the past two years, we have vigorously developed online sales channels, and multiple sales channels have basically formed. In terms of brands, we have actively created a “naughty” multi-brand matrix with high, medium, and low coverage, which effectively covers the needs of multiple pet breeders.

Based on comprehensive judgment, the prototype of the existing company’s platform-type enterprise has basically formed, and the continuous improvement of its own competitiveness in terms of channels and brands is the key to performance release.

At the current stage, the company’s short-term performance is under pressure due to two factors, namely, the substantial increase in costs and the continuous increase in expenses.

However, we think the company’s gross profit margin is expected to stabilize and recover within the next three years.

In terms of expenses, the current brand and channel construction is the main investment direction of the expense side. We believe that in the current stage of development, vigorous brand and channel construction is the key to improving the company’s competitiveness and ensuring the release of future performance, 佛山桑拿网 so there is no need to over-allocate.

Investment suggestion: We predict that the company’s territorial business income will reach 3 in 2019-2021.

7/5/7.

200 million, operating income reached 17 respectively.

3/20.

6/24.

400 million, the company’s net profit reached 0.

64/1.

01/2.

8.8 billion yuan, corresponding to the current PE of 59.

9/37.

7/13.

21 times, give “Buy” rating.

Risk warning events: industry growth is not up to expectations, food safety issues, etc.