CHINA PET FOODS(002891) 信达证券·2025-01-17 13:28Investment Rating - The report maintains a positive investment rating for Zhongchong Co Ltd (002891) [1] Core Views - Zhongchong Co Ltd is expected to achieve a net profit attributable to the parent company of 3.6-4.0 billion yuan in 2024, representing a year-on-year increase of 54.4-71.6% [1] - The company's domestic sales growth has accelerated, while overseas sales profitability has improved, with foreign exchange contributing to incremental gains [1] - In Q4 2024, the company achieved a median net profit attributable to the parent company of 0.98 billion yuan, a year-on-year increase of 73.7% [1] Domestic Sales - The company's domestic sales growth is expected to further accelerate in Q4 2024, with profitability gradually improving due to product structure adjustments and cost reduction initiatives [3] - The "Wanpi" brand completed adjustments by the end of Q1 2024, with its 100% fresh meat products performing exceptionally well in sales [3] - New products such as freeze-dried goat milk sticks were launched offline, contributing to the continuous acceleration of the "Wanpi" brand's growth and a significant increase in customer unit price [3] - The "Leading" brand maintained rapid growth, collaborating with the popular drama IP "Empresses in the Palace" and launching new baked cat food products [3] - The "Zeal" brand also maintained rapid growth, with popular products including the 0-number cans and air-dried food [3] Overseas Sales - Overseas sales orders grew steadily in Q4 2024, with both exports and overseas subsidiaries performing well [3] - According to the General Administration of Customs, China's pet food export value increased by 21.2% year-on-year in Q4 2024 (October-November), indicating continued strong demand [3] - The company's overseas production capacity is gradually expanding, with bases in the US, Canada, and New Zealand releasing incremental capacity [3] - As of August 2024, the company had 22 pet food production bases globally, exporting products to 82 countries and regions across five continents, with its own brands exported to 68 countries and regions [3] Financial Projections - The company's net profit attributable to the parent company is projected to be 3.8 billion yuan in 2024, 4.4 billion yuan in 2025, and 5.4 billion yuan in 2026 [3] - The corresponding P/E ratios are 31.0X, 26.9X, and 21.7X for 2024, 2025, and 2026, respectively [3] Key Financial Indicators - The company's operating income is expected to grow from 3.248 billion yuan in 2022 to 6.086 billion yuan in 2026, with a compound annual growth rate (CAGR) of 17.4% [5] - The net profit attributable to the parent company is projected to increase from 106 million yuan in 2022 to 540 million yuan in 2026, with a CAGR of 23.6% [5] - The gross margin is expected to improve from 19.8% in 2022 to 31.0% in 2026 [5] - The return on equity (ROE) is projected to increase from 5.1% in 2022 to 16.4% in 2026 [5] Balance Sheet and Income Statement - The company's total assets are expected to grow from 3.840 billion yuan in 2022 to 5.996 billion yuan in 2026 [7] - The company's operating income is projected to increase from 3.248 billion yuan in 2022 to 6.086 billion yuan in 2026 [7] - The net profit attributable to the parent company is expected to rise from 106 million yuan in 2022 to 540 million yuan in 2026 [7] Cash Flow - The company's operating cash flow is projected to increase from 120 million yuan in 2022 to 687 million yuan in 2026 [7] - The net cash flow from investment activities is expected to decrease from -436 million yuan in 2022 to -100 million yuan in 2026 [7] - The net cash flow from financing activities is projected to decrease from 511 million yuan in 2022 to -119 million yuan in 2026 [7]