Investment Rating - The report rates the company as "Outperform" with a target price of RMB 20 [4][13]. Core Insights - The company maintains growth in its pet food brand, particularly in the dog snack segment, and is actively expanding its overseas customer base, which is expected to drive new order growth [1][4]. - The company has achieved significant revenue growth during the 2025 Double 11 shopping festival through effective marketing strategies, solidifying its leading position in the dog snack category [4][14]. - The company focuses on developing its own brand in the mid-to-high-end pet food sector, supported by strong production, marketing, and R&D capabilities, which are rare in the industry [4][15]. - Tariff changes have temporarily pressured overseas business, but the company is optimistic about new client expansion opportunities, particularly in Europe [4][16]. Financial Summary - The projected total revenue for 2023 is RMB 1,411 million, with an expected increase to RMB 2,416 million by 2027, reflecting a compound annual growth rate (CAGR) of approximately 17.2% [3]. - The net profit attributable to the parent company is expected to recover from a loss of RMB 11 million in 2023 to RMB 241 million by 2027, indicating a strong turnaround [3]. - The earnings per share (EPS) is projected to increase from -0.04 RMB in 2023 to 0.97 RMB in 2027 [3]. Market Position - The company is recognized as a leading player in China's pet snack food sector and has received numerous accolades for its quality and innovation [9]. - The company is actively pursuing high-end market segments, with plans to introduce a New Zealand brand targeting premium pricing in the domestic market by 2026 [4][15].

Core Viewpoint - The report highlights the strong performance of Zhongchong Co., Ltd. (中宠股份) in the first half of 2025, driven by brand building and global capacity expansion, leading to a buy rating for the company [1][5]. Financial Performance - In H1 2025, the company achieved a revenue of 2.432 billion yuan, representing a year-on-year increase of 24.32%, and a net profit attributable to shareholders of 203 million yuan, up 42.56% year-on-year [2]. - In Q2 2025, revenue reached 1.331 billion yuan, with a year-on-year growth of 23%, and a net profit of 112 million yuan, reflecting a 30% increase year-on-year [2]. Domestic Market Performance - Domestic revenue for H1 2025 reached 857 million yuan, a growth of 38.89%, with a gross margin of 37.68%, up 0.89 percentage points year-on-year [3]. - The company has successfully enhanced its brand presence through strategic marketing initiatives, including collaborations with popular IPs to attract younger consumers [3]. - Product innovation is evident with the launch of new cat food products that cater to specific dietary needs, contributing to strong market performance [3]. International Market Performance - In H1 2025, overseas revenue amounted to 1.575 billion yuan, marking a 17.61% increase, with a gross margin of 27.95%, up 4.04 percentage points year-on-year [4]. - The establishment of a new factory in Mexico, with an investment of nearly 100 million yuan, signifies the company's commitment to expanding its global footprint [4]. - The company plans to enhance its production capacity in North America, with additional factories in the pipeline, which will improve market responsiveness [4]. Investment Recommendations - The company is expected to see revenue growth of 27% in 2025, reaching 5.66 billion yuan, with net profit projected at 470 million yuan, a 19% increase [5]. - Forecasts for 2026 and 2027 indicate continued growth, with revenues of 6.75 billion yuan and 8 billion yuan, respectively, and net profits of 540 million yuan and 710 million yuan [5].