Petpal Tech.(SZ:300673) HTSC·2025-08-26 09:11Investment Rating - The report maintains a "Buy" rating for the company [5][4]. Core Insights - The company reported a revenue of 728 million RMB for H1 2025, a year-over-year decrease of 13.94%, with a net profit attributable to the parent company of 79.1 million RMB, down 19.23% year-over-year [1][2]. - In Q2 2025, the company achieved a revenue of 399 million RMB, representing a year-over-year decline of 13.56% but a quarter-over-quarter increase of 21.17%. The net profit for Q2 was 56.87 million RMB, showing a year-over-year increase of 1.15% and a quarter-over-quarter increase of 155.85% [1][2]. - The report highlights that the impact of tariffs continues to pressure overseas revenue, which is estimated to have declined by approximately 15% year-over-year, while domestic revenue is slightly down due to a high base from last year’s agency business. However, the company's proprietary brands are experiencing rapid growth [2][3]. Summary by Sections Revenue and Profitability - For H1 2025, the revenue breakdown includes: - Chewable animal skin revenue of 232 million RMB, down 11.91% year-over-year, with a gross margin increase of 5.28 percentage points - Plant-based chewable revenue of 221 million RMB, down 25.72%, with a gross margin increase of 3.12 percentage points - Nutritional meat snacks revenue of 217 million RMB, up 14.35%, with a gross margin increase of 6.75 percentage points - Main and wet food revenue of 45 million RMB, down 44.74%, with a gross margin increase of 11.04 percentage points [2][3]. Margin Improvement - The company has shifted most of its production capacity to overseas factories in Vietnam and Cambodia, leading to improved raw material costs and exchange rates, resulting in a gross margin of 32% for H1 2025, up 5.63 percentage points year-over-year. Q2 2025 gross margin reached 34.8%, up 6.75 percentage points year-over-year [3][4]. Future Outlook - The company is expected to launch new products such as honey-glazed rabbit bones and baked dog food, which may further enhance domestic business margins and drive growth in proprietary brands [3][4]. - The profit forecast for 2025-2027 is set at 189 million RMB, 224 million RMB, and 263 million RMB respectively, with corresponding EPS of 0.76, 0.90, and 1.06 RMB [4][8]. - The target price is set at 22.04 RMB, based on a PE ratio of 29 times for 2025 [4][5].