Petpal Tech.(SZ:300673) Haitong Securities·2024-05-26 07:01Investment Rating - The investment rating for the company is "Outperform the Market" and is maintained [1]. Core Insights - The company's revenue from staple and wet food products has shown significant growth, achieving 210 million yuan in 2023, a year-on-year increase of 31.33%. This growth is driven by popular products such as "Jueyan Duck Jerky" and "Haosijia (98K) Wet Food Cans" [4]. - The company is expected to turn profitable from 2024 onwards, with projected net profits of 127 million yuan, 175 million yuan, and 229 million yuan for 2024, 2025, and 2026 respectively, reflecting a turnaround from losses in 2023 [5]. - The company has faced challenges in its pet food and other product segments, with revenues declining for items like animal skin chews and plant-based chews, which saw year-on-year decreases of 22.11% and 34.84% respectively [4]. Financial Performance Summary - In 2023, the company reported total revenue of 1.411 billion yuan, a decrease of 18.5% compared to 2022. The net profit was -11 million yuan, down from 127 million yuan in 2022 [6][16]. - The company’s gross margin decreased to 19.3% in 2023 from 22.3% in 2022, primarily due to reduced export orders affecting capacity utilization [7]. - The projected revenue for 2024 is 1.876 billion yuan, with a year-on-year growth of 33.0%, and the gross margin is expected to improve to 24.1% [9][20]. Market Performance - The company's stock has underperformed compared to the market index, with a decline of 32.47% from May 2023 to November 2023 [2]. - The company has implemented a multi-brand strategy in the domestic market, which has contributed to a 26.95% increase in domestic revenue in 2023 [17]. Valuation - The company is valued at a price-to-earnings (P/E) ratio of 29 and 21 for 2024 and 2025 respectively, with a target valuation range of 17.06 to 17.56 yuan based on comparable companies [5].