Summary of China Pet Foods Conference Call Company Overview - **Company**: China Pet Foods - **Event**: Asia Leaders Conference 2025 - **Date**: September 3, 2025 Key Points Domestic Market Insights - Management targets **35% year-over-year (yoy) sales growth** for FY25 in the domestic self-brand business, aiming for earnings of approximately **Rmb70-90 million** [4] - Ambition to **double domestic sales** on a 3-year rolling basis, primarily driven by the brand **Wanpy** [2][4] - **Toptree** brand expected to achieve **70%+ yoy sales growth** in FY25, with 2H sales growth anticipated to be slightly higher than 1H [4] - Wanpy's sales growth projected at **30%+ yoy** in FY25, with specific sales targets of **Rmb80 million** in 2H compared to **Rmb40 million** in 1H [4] - Management expects improved gross profit margin (GPM) for domestic business in 2H due to reduced sampling costs [4] - Strong potential identified in **O2O platforms** such as JD, Meituan, and Ele.me, with expectations to double or triple sales volume compared to market levels [4] Overseas Expansion - Management anticipates total overseas sales to reach **Rmb250 million** in 1H, up from **Rmb200 million** in the previous year, implying a total of **Rmb450 million** in FY25 [5] - GPM for overseas sales is around **30%**, lower than domestic due to distributor channels [5] - Long-term sales goal set at **Rmb1 billion** with expectations of rapid growth in new markets over the next 1-2 years [5] - New factories in the U.S. and Canada targeting high-end pet treats market, with **Rmb200 million** capacity added in Canada and **Rmb1.4-1.5 billion** in the U.S. [9] - Southeast Asia factories expected to reduce tariff impacts from **Rmb200 million** to less than **Rmb10 million** for overseas OEM business [9] Financial Projections and Risks - Management expects a **1-2 percentage point** margin expansion in 2H due to decreasing selling cost ratios and ongoing GPM improvements [2] - Selling expense ratio projected to stabilize around **30%**, with an expected increase of **Rmb20-30 million** in selling expenses compared to initial plans [10] - Key risks identified include slower-than-expected domestic revenue growth, food safety issues, forex fluctuations, and potential tariffs on pet food exports to the U.S. [11] Valuation and Price Target - The company is rated as a **Buy** with a 12-month sum-of-the-parts (SOTP) target price of **Rmb63.0**, based on **25X FY26E P/E** for overseas business and **30X FY27E P/E** for domestic business [11] Additional Insights - Management's focus on establishing a sales and marketing team in local markets for overseas expansion [8] - Emphasis on leveraging existing brand strength and market presence to drive growth in both domestic and international markets [2][4][5] This summary encapsulates the key insights and projections from the conference call, highlighting the company's growth strategies, financial expectations, and potential risks.