Core Insights - The pet industry is witnessing a clear capital landscape as the mid-year financial reporting season concludes, characterized by leading companies maintaining their positions, accelerated expansion in niche markets, and deepening global layouts [1] - Most companies have achieved varying degrees of revenue growth, while a few face performance pressures due to single business models, reflecting rapid domestic market expansion, the rise of private brands, and product structure optimization [1] Revenue Growth - Yuanfei Pet leads with a 45.52% year-on-year revenue growth, totaling 791 million yuan, driven by a 64.63% increase in pet snacks and a 55.39% rise in pet food [2] - Guobao Pet reported a total revenue of 3.22 billion yuan, up 32.72%, with a net profit of 378 million yuan, a 22.55% increase, primarily from domestic private brand contributions [2] - Zhongchong Co. achieved a revenue of 2.432 billion yuan, a 24.32% increase, with a net profit of 203 million yuan, reflecting strong cost control [2] - Tianjin Langnuo's revenue reached 138 million yuan, up 21.16%, with cat food sales driving growth [3] - Jianhe Group's pet nutrition and care products generated 1.08 billion yuan, an 8.6% increase, with high-end supplements growing by 14.3% [3] - Peti Co. is one of the few companies experiencing revenue decline, with a total revenue of 727 million yuan, down 13.94% [3] Strategic Investments - Companies are increasingly investing in global capacity layout, supply chain extension, private brand development, and digital transformation, which are expected to provide long-term competitive advantages [4] - Zhongchong Co. has established a factory in Mexico, becoming the first Chinese pet food company to do so, aiming to create a responsive global supply chain [4] - Yiyi Co. has also made progress in overseas capacity layout with a factory in Cambodia, producing nearly 300 million pet pads annually [4] - Ruipuhua is focusing on building a supply chain network with 13 regional companies covering 13,000 clients, including 8,400 pet hospitals and 3,500 pet stores [5] Brand Development - The establishment of factories is accelerating the development of private brands, with companies like Yuanfei Pet and Jianhe Group increasing investments in brand building to enhance product value and consumer loyalty [6] - Yuanfei Pet is expanding its domestic market presence through its own brands and distribution of international brands, creating a comprehensive product matrix [5][6] Market Outlook - The pet industry is optimistic about the second half of the year, with companies planning to focus on product innovation, market expansion, and supply chain optimization [7] - Ruipuhua plans to launch new products such as cat interferon and probiotics, while Haizheng Dongbao will expand into innovative and non-pharmaceutical areas [7] - Companies like Yuanfei Pet and Zhongchong Co. are aiming to balance domestic and international market structures through strategic expansions [7][8]

Core Viewpoint - Yuanfei Pet (001222) aims to position its brand, Pikapup, as a high-cost performance innovative brand offering a diverse range of products for pet owners, focusing on expanding its product categories and distribution channels [1] Product Strategy - The main products include dog chew sticks, wet food, freeze-dried food, cat litter, pet staple food, and pet travel supplies [1] - The company is leveraging its traditional strong products to quickly penetrate the dog snack market while expanding into staple food and other categories [1] Distribution Channels - Yuanfei Pet is simultaneously expanding its online and offline channels [1] - The company plans to continue developing new products based on its advantageous existing products [1]

Financial Performance - The company achieved a revenue of 7.92 billion yuan in the first half of 2025, representing a year-on-year growth of 45.52% [4] - Revenue growth by product category: - Pet snacks: +64.63% - Pet leashes: +6.91% - Pet food: +55.39% - Pet toys: +47.93% - Other revenues: +103.04% [4] - Domestic revenue increased by 136.77%, while overseas revenue grew by 31.44% [4] - Net profit attributable to shareholders was 7,416.36 million yuan, a slight increase of 0.37% compared to the previous year [4] - Gross margin for the first half of 2025 was 21.51%, down from 22.44% year-on-year [4] Sales and Marketing Strategy - Sales expenses for the first half of 2025 were 3,368.39 million yuan, an increase of 97.13% year-on-year, driven by a focus on expanding domestic market presence [5] - The company is emphasizing three major self-owned brands: Pikapoo, Halewi, and Legend Elf, with increased investment in domestic sales [5] Production and Supply Chain - The company operates two factories in Cambodia, both of which are currently at full production capacity [7] - The Cambodian factories are expected to increase capacity significantly with new constructions projected to be operational by mid-2026 [7] Impact of Tariffs - The company’s orders for the U.S. market are primarily produced in Cambodia, where tariffs have been adjusted to 19% this year. However, this has not significantly impacted operations [6] Market Position and Growth - The company is expanding its customer base from channel clients to brand clients, which is increasing order volumes [9] - Continuous innovation and product development are key to meeting diverse customer needs and maintaining growth in overseas markets [9]

Investment Rating - The report initiates coverage with a "Buy" rating for the company [5]. Core Views - The company is positioned as a leading player in the domestic pet supplies and food market, leveraging quality overseas customer resources and global production capacity advantages. It is actively developing its own brands to create a second growth curve. The company experienced a revenue turning point in Q2 2023 due to inventory replenishment and is expected to see revenue and profit resonance in 2024 as it focuses on its own brands [1]. Summary by Sections Company Overview - The company, Yuanfei Pet, was established in 2004 and initially focused on OEM/ODM business, primarily in pet leashes and snacks. It has formed deep partnerships with major international retailers like Walmart and PetSmart, with significant revenue from the US and Europe [14]. - The company has a diversified production capacity across multiple locations, including bases in Wenzhou and Cambodia, and is expanding its production capabilities [14]. Pet Industry - The domestic pet food market is growing at a CAGR of 10.1%, outpacing the global growth rate of 4.6%. In contrast, the pet supplies market in China is growing at a slower rate of 2.9% due to price wars among domestic brands and a slowdown in dog consumption growth [2]. 2B Business - The company's 2B business benefits from a strong production layout in Southeast Asia, deep partnerships with leading international channels, and technological advantages, including the development of over 8,000 new products annually [3]. Brand Business - The company is building its own sales channels and has launched three proprietary brands: Pikapoo, Haloway, and Legend Elf, which are expected to drive significant revenue growth. The brands focus on high-quality ingredients and unique selling propositions tailored to domestic pet needs [4]. - Recent sales data shows substantial growth for these brands on platforms like Douyin, with Pikapoo achieving significant sales rankings in its category [4]. Financial Forecast and Valuation - The company is projected to achieve revenues of 1.633 billion, 2.107 billion, and 2.540 billion yuan for 2025, 2026, and 2027, respectively, with corresponding net profits of 187 million, 225 million, and 259 million yuan. The EPS for 2025-2027 is estimated at 0.98, 1.18, and 1.36 yuan [1][9]. - The report indicates a PE ratio of 20, 16, and 14 for the years 2025-2027 based on the closing price of 19.15 yuan on July 28, 2025 [1].