Core Viewpoint - Yiyi Co. is acquiring the pet food brand Gao Ye Jia to diversify its business and reduce reliance on overseas revenue, which currently accounts for over 90% of its income [2][6]. Group 1: Acquisition Details - Yiyi Co. will acquire 100% equity of Gao Ye Jia through a combination of issuing shares and cash payments, with the expectation that this will enhance its financial metrics post-transaction [2]. - Gao Ye Jia, established in 2020, specializes in cat-related products and is projected to achieve sales of 600 million yuan in 2024, with its cat litter brand experiencing a 247% year-on-year sales increase to 260 million yuan [2]. Group 2: Strategic Rationale - The acquisition aims to strengthen Yiyi Co.'s existing business, expand its customer base, and improve profitability and sustainability, while also entering the pet food market for the first time [3]. - Yiyi Co. has previously established an industry fund to invest in the pet sector, indicating a strategic focus on this growing market [3]. Group 3: Market Context - The pet ownership demographic is expanding, with the number of urban pets in China expected to exceed 120 million by 2024, leading to a market size of 300.2 billion yuan, reflecting a 7.5% growth [4]. - The Chinese pet economy is projected to reach a market size of 1.15 trillion yuan by 2028, highlighting significant growth potential in the sector [4]. Group 4: Financial Performance - Yiyi Co.'s revenue for the first three quarters of 2025 was 1.306 billion yuan, a slight decline of 0.72% year-on-year, while net profit increased by 3.82% to 157 million yuan [6]. - The company reported a revenue growth of 9.34% in the first half of 2025, with net profit rising by 7.37%, contrasting with a much higher growth rate in the first half of 2024 [6]. Group 5: Domestic Market Strategy - To mitigate its dependence on overseas markets, Yiyi Co. is intensifying its focus on the domestic market, recognizing the low brand concentration and significant opportunities in China's pet market [7].
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