RINGPU(300119)2024-12-17 09:20Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of RMB 23.65 [2][6]. Core Views - The company plans to acquire a 56.31% stake in Zhongrui Supply Chain for RMB 104 million, enhancing its position in the pet sector. This acquisition is expected to strengthen the company's "Three Rui Integration" advantage, leveraging its strengths in livestock products to further develop the pet segment [2][3]. - Zhongrui Supply Chain has shown positive operational performance, with revenues reaching RMB 546 million from January to October 2024, and a compound annual growth rate (CAGR) of 170% from 2021 to 2023. The company turned profitable in 2022, with a net profit margin increasing from -2.8% in 2021 to 1.7% in the first ten months of 2024 [3][4]. Summary by Sections Acquisition and Integration - The acquisition of Zhongrui Supply Chain aims to enhance the company's supply chain capabilities in the pet healthcare sector, providing a unified procurement service for pet hospitals and stores. Zhongrui currently serves 7,000 pet hospitals and 3,400 pet stores nationwide, achieving 100% coverage of the Ruipai system [4][5]. - The integration is expected to reduce costs and improve efficiency for Ruipai Pet Hospitals, facilitating standardized expansion and increasing the distribution of animal health products [4]. Market Potential - The pet healthcare market in China is substantial, with a market size of RMB 279.3 billion in 2023, where the medical segment accounts for 28.5%. The number of pet hospitals reached 3,130 by the first half of 2024, reflecting a year-on-year growth of 10% [5]. - The company has established a strong presence in this sector, launching significant products such as Rui Mei Jing and Mo Pu Xin, and is focusing on new vaccine products for cats [5]. Financial Forecast and Valuation - The company maintains its profit forecast, expecting net profits of RMB 4.1 billion, RMB 5.1 billion, and RMB 6.3 billion for 2024-2026, with year-on-year growth rates of -10%, +26%, and +23% respectively. The valuation for 2025 is set at 21.5X PE, leading to the target price of RMB 23.65 [6][10].