Core Viewpoint - The pet stock sector has experienced significant growth, with a year-to-date increase of 36%, driven by the recent "618" sales event [1][4]. Group 1: Market Performance - Leading companies in the pet sector, such as Tianyuan Pet and Zhongchong Co., have seen stock increases of approximately 80% and over 70% respectively, with Zhongchong Co. rising from 17 yuan to 63.8 yuan, a 245% increase since July of the previous year [4]. - The "pet economy index" has shown no declines among its constituent stocks this year, indicating a strong upward trend [4]. - During the initial hours of the "618" sales event, 653 pet brands on Tmall saw their sales double year-on-year, with significant increases in sales for brands like Xianlang and Dazhongai, both experiencing growth of nearly 200% [4]. Group 2: Investment Trends - Public funds are primarily focusing on leading stocks in the pet sector, with a notable lack of interest in smaller-cap stocks despite their impressive performance [2][5]. - For instance, the leading stock, Guibao Pet, had a public fund holding ratio of 7.63% as of the end of Q1, while Zhongchong Co. was included as a major holding by 71 funds [5]. - Smaller companies like Tianyuan Pet, which specializes in pet home products, have not attracted significant public fund investments, although recent investor interest has been noted [5]. Group 3: Future Growth Potential - The pet industry is projected to continue its growth, with estimates suggesting that the urban pet consumption market will exceed 404.2 billion yuan by 2027, reflecting a compound annual growth rate of 12.6% [4]. - The pet food market is expected to capture nearly half of the total pet economy, indicating substantial growth potential [6]. - The aging pet population is anticipated to drive demand in the pet medical sector, which is currently underrepresented in the public market [6]. Group 4: Competitive Landscape - The competitive landscape within the pet industry is evolving, with a trend towards increased market concentration among leading brands, as smaller companies face challenges such as funding issues and layoffs [8]. - The market is witnessing a shift from a pyramid structure to a spindle structure, where leading domestic brands are expected to gain market share from imported brands while upgrading their product offerings [9]. - The demand for pet medical services is also expected to grow due to the aging pet population, further contributing to market concentration among leading providers [9].

Summary of Conference Call on Pet Industry and Companies Industry Overview - The pet industry is experiencing rapid growth, with an annual compound growth rate of approximately 10% driven by increasing pet ownership and the rising penetration of pet food products [2][10] - The pet medical market is projected to reach 80-90 billion by 2025, making it the second-largest segment after pet food [10] Key Companies and Their Performance 1. Guibao Pet - Guibao Pet's self-owned brand has shown strong performance, with revenue of approximately 3.5 billion, accounting for nearly 70% of total revenue, and a net profit margin of 12% [1][4] - The high-end cat food brand, Fliegate, achieved a growth rate of 100% last year and maintained the same growth rate in Q1 of this year [4] - Guibao is expected to become a leading enterprise with projected revenues nearing 25 billion and net profits around 5 billion in the medium to long term [1][4] 2. Zhongchong Co., Ltd. - Zhongchong Co., Ltd. experienced a significant growth of nearly 200%-300% from its previous low, with total revenue from its three domestic brands (Wangpi, Lingxian, and ZIP) reaching 1.4 billion last year [5] - The company aims for overseas revenue of 400 million this year, maintaining a growth rate of 50% [5][6] - The net profit margin for its North American subsidiary is reported to be between 15%-20% [6] 3. Petty Co., Ltd. - Petty's overseas business accounts for a significant portion of its operations, with a focus on exports to the U.S. [8] - Domestic revenue was approximately 290 million last year, with a target of 400-450 million this year, reflecting a growth of over 40% [9] - The company is adjusting its product lines and plans to launch new baked grain products in Q2 and Q3 [8][9] Market Dynamics and Future Outlook - The pet medical sector is characterized by a lack of dominant players, with foreign brands leading in pharmaceuticals and vaccines, indicating substantial room for domestic companies to grow [11][12] - The average medical expenses for pets have doubled due to increasing age, leading to a rigid demand for medical services [10] - Companies like Ruipuhua and KQ Bio are recommended for their comprehensive industry layouts and potential for growth in the pet medical field [13][15] Additional Insights - The overall pet industry is expected to continue expanding, with self-owned brands focusing on product innovation to enhance profitability [2] - The competitive landscape in the pet medical sector is still developing, with many local companies poised to capture market share as the industry matures [12] - Other companies to watch include Baisha Technology, Biological Shares, and Zhongmu Shares, which have varying degrees of involvement in the pet medical sector [18]

Core Insights - The pet economy in China has surpassed 500 billion yuan, maintaining over 20% growth for five consecutive years, driven by social changes, evolving consumer attitudes, and technological advancements [1][4]. Group 1: Observations on the Pet Economy - The pet product consumption is experiencing a refined upgrade, with functional cat food and high-end products growing over 50%, and smart pet products expanding at an annual rate of 35% [4][5]. - The pet service sector has developed a dual-layer consumption structure, with basic services like pet grooming seeing a 180% increase in search volume, and pet insurance adoption rates quadrupling over three years [5]. Group 2: Driving Factors Behind Pet Economy Growth - Social changes, such as aging and declining birth rates, have redefined family structures, with pets providing emotional support for lonely individuals [6]. - There is a shift in consumer perception, with younger generations viewing pets as family members, leading to increased spending on pet-related products and services [7]. - Technological innovations, including IoT and AI, are reshaping the pet industry, enhancing efficiency and standardization [8]. Group 3: Challenges and Concerns in the Industry - The pet market faces issues such as fraudulent practices in live pet trading and a lack of standards in pet food, leading to a 120% increase in consumer complaints in 2024 [10]. - Intense competition has emerged due to significant capital influx, resulting in a "price war" among brands, particularly in the pet supplies sector [11]. - Regulatory frameworks are lagging, with a lack of unified standards in emerging areas like pet insurance and veterinary services [12]. Group 4: Future Trends in the Pet Economy - The industry is expected to see a parallel growth in smart and health-focused products, with health-related spending projected to exceed 40% of total pet expenditures [13]. - Professionalization and standardization of services are anticipated, with leading companies enhancing service quality through brand and chain development [14]. - Cross-industry integration is likely to create new business models, such as pet-themed hotels and training courses, expanding the consumption landscape [15]. Group 5: Benefiting Companies - Guobao Pet is projected to generate 5.244 billion yuan in revenue in 2024, leading the domestic pet business sector, with a 34.82% year-on-year increase in Q1 2025 revenue [16]. - Zhongchong Co. is expected to achieve 4.464 billion yuan in revenue in 2024, ranking second, with a 25.41% year-on-year increase in Q1 2025 revenue [16]. - Tianyuan Pet is anticipated to reach 2.764 billion yuan in revenue in 2024, ranking third among domestic pet companies [16]. - Yuanfei Pet, a leading global pet leash manufacturer, has over 90% of its products exported, with a significant portion of high-margin products [17]. - Ruipu Bio is collaborating with veterinary hospitals to enhance its pet medical services, projecting 690 million yuan in revenue for 2024 [17]. - Yiyi Co. is focusing on disposable pet hygiene products, with a projected revenue of 1.798 billion yuan in 2024 [19].

Group 1: Pet Industry - The domestic pet food market is showing strong performance, with top brands like MaiFuDi and FriegaTe leading sales during the 618 shopping festival [2] - The growth of the pet economy in China is notable, with domestic brands demonstrating strong innovation capabilities [2] Group 2: Feed Industry - The feed production in China is experiencing significant growth, with April 2025 data showing a production of 27.53 million tons, a month-on-month increase of 4.2% and a year-on-year increase of 9.0% [3] - The recovery of pig stocks and high levels of poultry farming are expected to drive feed industry growth, alongside overseas expansion by major feed companies [3] Group 3: Agriculture - Recent drought conditions in the Huang-Huai-Hai region are affecting wheat production, with 40% of counties experiencing severe drought [4] - Grain prices are on the rise, with corn prices reaching 2375 RMB/ton and wheat prices at 2468 RMB/ton as of May 16, 2025, indicating a favorable environment for planting profitability [4]

Market Overview - On May 20, the A-share market experienced a collective rise, with the Shanghai Composite Index increasing by 0.38%, the Shenzhen Component Index by 0.77%, and the ChiNext Index by 0.77%. The North Star 50 Index reached a historical high with a 1.22% increase. The total market turnover was 12,112 billion yuan, an increase of 923 billion yuan from the previous day, with over 3,800 stocks rising [1]. Pet Economy - The pet economy sector saw significant gains, with multiple stocks hitting the daily limit [2]. - Recent disclosures from several listed companies in the pet industry, such as Zhongchong Co. and Guibao Pet, indicated substantial growth in their 2024 and Q1 2025 performance. The pet economy in China reached a scale of 5,928 billion yuan in 2023, with expectations to grow to 11,500 billion yuan by 2028 [3]. - According to the 2025 China Pet Industry White Paper, pet food constitutes the largest segment of pet consumption, projected to hold a market share of 52.8% in 2024. The breakdown of pet consumption includes 35.7% for pet staple food, 13.5% for snacks, and 3.6% for nutritional products [3]. - CITIC Securities research indicates that the pet sector's performance is expected to continue growing in 2025, highlighting the strong demand resilience and the current market structure of "large industry, small leaders," with an anticipated increase in market share for leading companies through product innovation and brand development [3]. Beauty and Women's Economy - The cultivated diamond sector led the market with a 4.10% increase, while the beauty and personal care sector also performed well, attributed to the rise of the "she economy." Data from Tmall indicated that over 13,000 brands saw their sales double within the first hour of the "6·18" sales event, with domestic beauty brands performing particularly well [4]. - According to Tianyancha, there are over 8.65 million enterprises related to the "she economy" currently in operation in China, with approximately 726,000 new registrations in 2025 alone. Guangdong, Shandong, and Zhejiang provinces have the highest number of such enterprises [4]. - Tianyancha Research Institute suggests that the influence of women is shifting industries from "traffic harvesting" to "value co-creation," emphasizing the importance of understanding women's deep-seated needs in areas like "scientific parenting," "self-growth," and "emotional resonance" to capture opportunities in the 10 trillion yuan market [4].

Core Insights - The pet industry in China is experiencing significant growth, driven by market dynamics such as population structure changes, emotional needs, and improved living standards [2][4] - Major pet companies like Zhongchong Co. and Guobao Pet have reported substantial revenue increases for 2024 and Q1 2025, indicating a robust market environment [1][2] - The pet food segment is the largest market within the pet industry, accounting for 52.8% of the total pet consumption market in 2024 [3][4] Company Performance - Zhongchong Co. achieved a revenue of 4.465 billion yuan in 2024, a year-on-year increase of 19.15%, with a net profit of 394 million yuan, up 68.89% [1] - Guobao Pet reported a revenue of 5.245 billion yuan in 2024, a 21.22% increase, and a net profit of 625 million yuan, growing by 45.68% [1] - Petty Co. saw a revenue of 1.659 billion yuan in 2024, a 17.56% increase, but experienced a decline in Q1 2025 with revenues of 329 million yuan, down 14.40% [2] Market Trends - The pet economy in China reached a scale of 592.8 billion yuan in 2023, with projections to grow to 1.15 trillion yuan by 2028 [2] - The demand for pet food is evolving, with consumers increasingly prioritizing quality, safety, and brand reputation [4][6] - The market is witnessing a shift towards premium products, with companies focusing on innovation and differentiation to capture consumer interest [6][7] Industry Dynamics - Domestic pet brands are gaining market share at the expense of foreign companies, with brands like Guobao Pet and Zhongchong Co. increasing their market presence [5] - The competitive landscape is intensifying, with new entrants like Pet&Fresh and established brands like Three Squirrels expanding into the pet food sector [7][8] - Companies are investing in digital transformation and supply chain enhancements to improve operational efficiency and brand competitiveness [5][6]

Summary of Key Points from Conference Call Records Industry Overview - The pet industry is experiencing significant growth, driven by domestic brands innovating and moving from low-end to high-end products, particularly in emerging categories like baked pet food. This shift has been aided by rising prices of foreign brands due to import tariffs, leading to increased market share for domestic brands [1][4]. Company Performance Highlights Guai Bao Pet - Guai Bao Pet reported a Q1 revenue of 1.48 billion, a year-on-year increase of 34.8%, with net profit rising 38% to 200 million. The revenue from its own brand grew over 40%, achieving an operating profit margin of 13.8%. Both domestic and international sales increased, with domestic sales up 45% and international sales up 18%. The gross margin was 41.6%, slightly down by 0.5 percentage points, but profitability of the own brand improved significantly. The company expects a growth rate of 30%-40% for its own brand throughout the year [5]. Zhongchong Co. - Zhongchong Co. saw a domestic revenue growth of over 40% for its own brand in Q1, with overseas business growing approximately 20%. The second factory in the U.S. will increase North American capacity to 3 billion, effectively mitigating geopolitical risks. The "Wang Pi" brand has shown a growth rate of over 40% for two consecutive quarters, marking the best development phase since its listing [6]. Repu Bio - Repu Bio's Q1 revenue grew by 54%, with profits increasing by 33%. The livestock vaccine segment maintained steady growth, with a 21% increase in revenue from the livestock sector. The company plans to increase the share of its Chinese supply chain from 24% to 70%-80% over the next two years [7]. Natural Pet Food Company - The Natural Pet Food Company announced the acquisition of East China Technology, aiming to establish a comprehensive online and offline channel. The company anticipates achieving total revenue of 500-1,000 million, corresponding to a market value increase of 3-4 billion. The main segment is expected to generate around 100 million in profit, with a valuation of about 20 times, indicating it is at a relatively low point in its growth phase [8]. Investment Recommendations - The pet industry is characterized by high demand and scarcity, suggesting a sector-wide allocation is advisable. Key recommendations include Guai Bao Pet, Zhongchong Co., and Repu Bio, with projected profits for Guai Bao Pet at 840 million in 2025 and 1.12 billion in 2026, and similar growth expectations for the other two companies [2]. Market Trends and Future Outlook - The pet health product sector is identified as a new blue ocean market, transitioning from initial stages to a long-term high-growth window. The consumption of pet health products in China is significantly lower than in the U.S. and Japan, indicating substantial growth potential [3][9]. - The long-term development logic of the pet industry is based on the increasing perception of pets as family members, particularly in urban areas. This trend is expected to drive the premium pet market, with the European pet premium market projected to reach 1.7 billion euros by 2024, growing at an annual rate of about 14% [10]. Challenges and Opportunities - The pet food industry faces opportunities from the growing trend of pet health product consumption. However, challenges include the relatively small domestic market and the need for companies to adapt to changing consumer preferences and behaviors [14][18]. - The entry of human health product companies into the pet health product sector is seen as advantageous due to their established production techniques and supply chain management capabilities, which can enhance the overall industry landscape [15][16][17]. Conclusion - The pet industry in China is poised for significant growth, driven by innovation, changing consumer behaviors, and the increasing humanization of pets. Companies that adapt to these trends and leverage their strengths in supply chain and product development are likely to succeed in this evolving market [12][13].

作者 | 守望者 来源 | 守望核心 导语： 拆解宠物板块持续新高背后的三大预期与核心标的逻辑。 宠物板块持续新高的背后市场在交易什么预期，借助公开资料，理一下宠物板块的β及选股思路， 以及个股的核心看点 。 一、大背景 宠物经济蓬勃发展的内核是宠物的 "人格化、家人化" ， 年轻一代将宠物视为"家人"的情感价值重 构。 1、宠物经济正是基于这一情感纽带蓬勃发展，从提供高品质的宠物食品、个性化的宠物用品，满 足宠物的物质需求； 2、到宠物医疗、保险，为宠物的健康保驾护航； 3、再到宠物美容、摄影、社交活动等，满足主人与宠物之间情感互动的精神需求。 每一个细分领域，让宠物真正融入家庭生活，也让宠物经济的内涵和外延得以不断拓展和深化 。 二、宠物是一个大赛道 1、横向对比化妆品、白酒、食品等来看， 宠物赛道是消费里面少有量价齐升的板块 ，并且随着单 身经济及消费方式的转变， 从实物消费到情绪消费的转变 ，相信大家多少在家里面都多少有一些 宠物（常见的是猫、狗，稀罕的是鸟、仓鼠、乌龟、蛇等），宠物恰逢其时，目前A股从宠物食品 到医疗已经形成一个完整的贝塔。 C、主业稳健，每年贡献净利润大几千万，收购的淘通科技可以贡 ...

Core Viewpoint - The era of easy profits in the liquor sector is fading for investors in the consumer space, prompting public funds to actively expand their investment boundaries and reconstruct their investment methodologies in response to changing consumer habits and channels [1][2]. Investment Strategy Adjustments - The FuGuo Consumption Upgrade Mixed Fund announced adjustments to its investment scope to better meet investor needs and enhance market competitiveness, incorporating the beauty and personal care sector into its consumption upgrade theme [1][2]. - The fund manager emphasized a focus on emerging consumer sectors, particularly companies with global competitive potential, as evidenced by the fund's increased holdings in stocks like Pop Mart and Lao Pu Gold [2]. Performance of Emerging Consumer Stocks - Emerging consumer stocks have shown significant growth, with companies like Pop Mart and Lao Pu Gold experiencing stock price increases of over 100% this year [3]. - Several funds heavily invested in emerging consumer sectors have seen substantial net asset value increases, with some funds reporting returns exceeding 42% year-to-date [3]. Market Trends and Consumer Behavior - Traditional consumer stocks, particularly in the liquor sector, are underperforming, while new sectors such as pet economy, beauty care, and gold jewelry are thriving [3][4]. - Fund managers are adapting their strategies to align with market changes, focusing on mid-to-high-end domestic brands that are competing with foreign brands in various sectors [4]. Focus on New Consumption Channels - Industry experts highlight the importance of adapting to new consumer behaviors and channels, such as the shift from traditional media to platforms like Douyin and Xiaohongshu, which are reshaping brand engagement [5][6]. - The rise of new product categories, including pet food and functional beverages, is noted as a significant opportunity for growth in the consumer market [5][6]. Technological Innovations and Market Opportunities - The integration of AI technology is driving the emergence of innovative products like AI glasses and smart home devices, creating new growth opportunities in traditional industries [6]. - The rapid growth of "self-care" consumption categories, such as medical aesthetics and pet economy, is also highlighted as a key trend in the consumer market [6].

Summary of Zhongchong Co., Ltd. Conference Call Company Overview - Zhongchong Co., Ltd. focuses on the domestic market strategy and significant expansion of staple food business, which has notably improved profitability. The expected profit for 2025 is approximately 440 million yuan, and it is projected to exceed 550 million yuan in 2026. The compound annual growth rate (CAGR) for the next three years is expected to reach around 30% driven by high growth of domestic self-owned brands [2][3][18]. Industry Dynamics - The acceleration of domestic substitution and increased import tariffs have raised the entry barriers for American pet food into the Chinese market, providing opportunities for domestic brands like Zhongchong to capture high-end market shares, especially in the price range of 70-100 yuan per kilogram [2][8]. - The pet food industry is experiencing rapid growth, with the staple food market holding significant importance due to its larger scale and typically higher profit margins compared to snack products. The trend shows that domestic brands are gradually rising, occupying top positions in sales rankings, while foreign brands are losing ground [7][9]. Key Financial Insights - The target stock price for Zhongchong is set at 75 yuan, with a valuation level of 50 times earnings based on the expected profit of 440 million yuan for 2025. The profit is anticipated to exceed 550 million yuan in 2026, indicating substantial room for stock price appreciation compared to industry leader Guaibao Pet Food [4][5]. Market Performance - Zhongchong has made significant strides in online sales, with its leading brand's ranking on Douyin and Taobao rising from outside the top 40 to around 19. The brand's growth rate on Douyin is approaching triple digits, showcasing the success of its online marketing strategies and strong production capabilities [2][10][11]. Research and Development - In 2024, Zhongchong's R&D expenditure is expected to grow at a rate leading the industry. The focus will be on researching animal nutrition components, pathology, and products related to the living habits of local dog and cat breeds. The company is also collecting intestinal flora data from cats and dogs to develop products better suited for the Chinese market [2][13][14]. Competitive Landscape - Domestic brands are currently increasing their rankings through substantial marketing expenditures, but there are concerns regarding their profitability and long-term sustainability. In contrast, Zhongchong not only achieves positive profitability but also invests heavily in R&D, ensuring long-term growth potential [15]. International Expansion - Zhongchong has established a deep presence in the U.S. market, having set up a pet snack factory in 2015 and currently constructing a second factory expected to be operational in the first half of 2026. This expansion is anticipated to significantly boost overseas revenue and profits [5][17][18]. Future Outlook - The company is optimistic about revenue and profit growth in the coming years, with expectations of increased overseas income following the launch of the second U.S. factory. The domestic market, primarily focused on staple foods, is characterized by large potential, strong customer loyalty, and high profit margins, making revenue growth more certain [18]. Market Sentiment - There are mixed views in the market regarding Zhongchong's future prospects, with some investors skeptical about the stock's high valuation and growth rates in the upcoming quarters. However, the company remains confident in its solid domestic and international strategies, maintaining a recommendation for investment [19].