CHINA PET FOODS(SZ:002891) Nan Fang Du Shi Bao·2025-08-06 14:27Core Viewpoint - Zhongchong Co., Ltd. reported a significant revenue growth of 24.32% year-on-year for the first half of 2025, reaching 2.432 billion yuan, with a net profit increase of 42.56% to 203 million yuan. However, concerns remain regarding the product structure, as domestic revenue is only 54% of international revenue, and the main food revenue is less than half of the snacks revenue, contrasting with industry trends that favor main food consumption over snacks [2][3][5]. Revenue and Profit Analysis - In the pet food and supplies segment, Zhongchong achieved revenue of 2.335 billion yuan, accounting for 96.03% of total revenue, with a year-on-year growth of 24.24%. The pet snacks business generated 1.529 billion yuan, representing 62.89% of total revenue, with a growth of 6.37%, while the main food business saw a remarkable growth of 85.79%, reaching 783 million yuan, which is 32.21% of total revenue [3][4][5]. - The gross profit margin for pet snacks was 30.63%, while the main food gross profit margin was higher at 36.63%. The domestic market revenue was 857 million yuan, accounting for 35.25% of total revenue, with a growth of 38.89%, while international revenue was 1.574 billion yuan, making up 64.75% of total revenue, with a growth of 17.61% [4][5]. Market Structure and Trends - The current revenue structure shows that pet snacks remain the primary revenue source for Zhongchong, being twice the size of the main food products. However, the main food segment is experiencing a strong growth momentum, with significant increases over the past five years [5][6]. - The company is focusing on enhancing its domestic market revenue capabilities, as indicated by its employee stock ownership plan, which ties stock unlock conditions to achieving specific domestic revenue targets for 2024, 2025, and 2026 [6][7]. Investment Projects and Challenges - Two key main food investment projects are currently facing delays, with zero investment to date and postponed production timelines, which may hinder future growth potential. These projects are expected to be operational by mid-2026 and mid-2027, respectively [7][8]. - In contrast, other projects, such as the freeze-dried pet food project and warehouse transformation project, have seen substantial investment and are nearing completion, highlighting a disparity in project execution [8][9]. Strategic Outlook - Zhongchong's management acknowledges the low market concentration in China's pet industry compared to developed countries, indicating potential for growth and consolidation. The company is also adapting to changing consumer preferences, which increasingly favor brand reputation and product quality [10][11]. - The establishment of a new factory in Mexico is part of Zhongchong's strategy to enhance its global supply chain and support its international expansion efforts, which have been a core focus for the company [11][12].