Summary of Conference Call Notes Industry Overview - The conference focused on the pet food industry, highlighting the strong growth momentum and the rise of domestic brands in the market [3][20]. - The competitive landscape shows a shift with domestic brands gaining market share, particularly in the pet food sector [3][20]. Key Points and Arguments - **Profit Growth**: Companies like Lusi and Peddy reported profit growth rates of 45%, 69%, and 15% respectively, indicating a robust performance across the sector [2]. - **Domestic Market Performance**: The domestic market for pet food is thriving, with brands like Guobao and Zhongchong showing significant revenue increases. Guobao's domestic revenue reached 3.55 billion, a 24% year-on-year growth, while Zhongchong's revenue was 1.414 billion, growing by 30.3% [6][9]. - **Market Share Dynamics**: In the top 20 pet food brands, foreign brands still hold 6 to 7 positions, but domestic brands are rapidly rising, especially during major sales events like Double Eleven [4][3]. - **Mainstream Products**: The pet food market is primarily driven by staple foods, which account for over 80% of the market share, while snacks only represent about 8% [7]. - **High Profit Margins**: Staple foods generally have higher profit margins compared to snacks due to lower labor requirements in production [8]. Emerging Trends - **Domestic Brand Growth**: There is a strong expectation for domestic brands to continue growing, with projections suggesting Guobao could achieve over 20% growth in the next few years [9]. - **Impact of Tariffs**: Changes in tariffs, particularly from the U.S., are creating opportunities for domestic brands to fill the gap left by foreign imports, especially in the high-end market segment [12][14]. - **Export Growth**: The pet food export market is also expanding, with a 20% growth reported in 2024, driven mainly by snack products [15]. Additional Insights - **Product Innovation**: Companies are focusing on product innovation and marketing strategies to enhance their market presence, with positive feedback on new product lines like broth series [11]. - **Investment Opportunities**: The report highlights Zhongchong and Guobao as key players to watch, with Zhongchong's U.S. factory providing a competitive edge in the export market [16][17]. - **Pharmaceutical Sector**: The pet pharmaceutical market is also noted as an area of interest, with companies like Ruipu Biological showing promise in pet medicine and supply chain management [20]. Conclusion - The pet food industry is experiencing a vibrant phase of growth, driven by domestic brands and changing market dynamics. The focus on staple foods, innovative products, and strategic responses to tariff changes are key factors contributing to this positive outlook [18][19].

Core Viewpoint - The article highlights the growth and expansion of Zhongchong Co., a leading player in the pet food industry, particularly under the leadership of its founder, Hao Zhongli, who has made significant investments and strategic moves to enhance the company's market position and global footprint [1][4][22]. Company Overview - Zhongchong Co. has invested over 800 million yuan in New Zealand, acquiring the high-end pet food brand ZEAL and establishing three production bases [1]. - The company started from pet snack OEM and now owns several brands, including Wanpi and Zhenzhi, with 22 production bases globally [3][22]. - The stock price of Zhongchong Co. has increased nearly 80% since the beginning of the year, indicating strong market performance [4]. Financial Performance - From 2022 to 2024, Zhongchong's revenue is projected to rise from 3.248 billion yuan to 4.465 billion yuan, while net profit is expected to grow from 106 million yuan to 394 million yuan, nearly quadrupling [7]. - The company's gross margin was 29.13% last year, which is lower than its competitor, Guobao Pet, at 42.32% [10][11]. - The company has improved its domestic gross margin to 35.18% through product restructuring and the introduction of high-margin products [11]. Market Strategy - Zhongchong Co. focuses on the mid-to-high-end market, leveraging a "domestic brand + cost performance" strategy [9]. - The company has shifted from an OEM model, which contributed 58% of its revenue, to a self-operated sales model, with over 68% of revenue coming from overseas [14]. - The company has established a strong online presence, with e-commerce channels accounting for approximately 70% of total pet sales in China [17]. Marketing and Branding - The company employs various marketing strategies, including collaborations with celebrities and social media influencers, to enhance brand visibility [18]. - In 2022, online sales of its proprietary brands accounted for 60% of domestic revenue, while offline sales made up 40% [19]. Research and Development - Zhongchong Co. invested 72.68 million yuan in R&D last year, a year-on-year increase of over 50%, representing 1.63% of total revenue [20]. Global Expansion - The company has established 22 production bases worldwide, including in the U.S., Canada, and New Zealand, and products are sold in 85 countries [22][23]. - The U.S. factory, built with an investment of 28 million USD, became profitable in its first year of operation [21]. - The company plans to expand its production capacity in North America, with a second factory expected to be completed by 2026 [24].

Summary of Pet Food Industry Conference Call Industry Overview - The pet food industry is experiencing rapid growth and brand upgrades, with leading brands showing significant growth rates. For instance, a prominent brand reported a year-on-year growth of 70% [1][2]. - The emergence of new pet brands has significantly decreased, leading to increased operational difficulties and financial pressures for smaller brands, resulting in a rapid increase in market share for leading brands [3][6]. Key Insights - **Sales Performance**: - Major brands like 麦富迪 (Mai Fu Di) and 弗列加特 (Fleegat) reported year-on-year growth rates of 30% and 106% respectively, while 京东 (JD.com) saw a decline of 7.3% in sales [2][3]. - The overall performance of JD.com in the first four months of 2025 was below expectations, despite leading brands maintaining good growth [2]. - **Product Trends**: - High-end baked pet food is increasingly replacing traditional puffed food, with prices for baked food significantly higher (e.g., Fleegat baked food at approximately 89 RMB/kg compared to puffed food at around 74 RMB/kg) [1][2][4]. - Companies are diversifying their product lines to include specialized food for different life stages and breeds, which raises the bar for supply chain and R&D capabilities [1][4]. - **Brand Strategy Changes**: - There is a notable shift in brand operations towards emphasizing supply chain safety and food safety traceability. Companies are collaborating with media outlets and launching new product lines to enhance consumer awareness [5]. - The focus on complete supply chains and traceable raw materials is becoming essential for ensuring product safety, with companies either investing in their own supply chains or partnering with established manufacturers [5]. Market Dynamics - **Competitive Landscape**: - The market is witnessing a rapid reshuffling, with leading brands gaining market share at the expense of smaller, less established brands [3][6]. - The overall production capacity in the upstream sector is relatively surplus, but leading companies are still receiving good order volumes, while smaller firms face challenges [7]. Future Outlook - The pet food market is projected to have high growth potential, with companies like 乖宝 (Guai Bao) showing significant sales growth from several billion to 35 billion RMB, and net profit margins increasing from 3-4% to around 12% [3][8]. - The trend of young consumers favoring online shopping and product upgrades is expected to continue, with no signs of a consumption downgrade [8]. - The potential for a company to reach a market capitalization of 100 billion RMB is anticipated, indicating a strong long-term growth trajectory for the industry [8]. Cost and Profitability - Raw material costs are currently low, allowing companies with supply chain advantages to absorb these costs and improve gross margins. For example, Guai Bao's sales growth and profit margin improvements reflect the benefits of product upgrades targeting young consumers [9].

Investment Rating - The investment rating for the light industry manufacturing sector is "Positive" [2] Core Insights - Overall consumer demand remains weak, but there are opportunities in specific segments where product and channel transformations can enhance market share, and brand recognition or performance recovery is expected [8] - The pet food segment shows high potential with strong consumer education barriers, brand loyalty, and significant single product effects [8] - The baby care market is fragmented, with strong brands rapidly increasing market share through cost-effectiveness and popular products, heavily relying on online sales [8] - Domestic second-tier brands in sanitary napkins and toothpaste are gaining market share, utilizing platforms like Douyin for marketing and channel empowerment [8] - The trend of innovative products and brand rejuvenation in the trendy toy sector is accelerating, with companies like Pop Mart and Blokus experiencing rapid revenue growth [8] Summary by Sections 1) Product & Channel Transformation - Baiya Co. reported a significant increase in revenue and is expected to see a gradual improvement in its profitability model [9] - Dengkang Oral Care's revenue growth exceeded expectations, with a sustainable improvement in profitability [9] - Runben Co. experienced strong revenue growth driven by new product launches, particularly in the sunscreen category [9] - Zhongchong Co. is successfully transforming its brand, with expectations of over 40% growth in its flagship product [9] - Companies in the trendy toy sector are well-positioned to benefit from consumer trends and new product launches [9] 2) High Competitive Barriers - Guibao Pet's revenue and profit growth exceeded expectations, driven by strong brand performance and successful high-end product launches [10] - The overall industry remains vibrant, with companies optimizing their product and channel structures [10] 3) Performance Recovery Expected - Chenguang Co. has underperformed due to a weak consumer environment, but recovery is anticipated if market conditions improve [10] - The company is focusing on enhancing its IP product strategy, which is expected to contribute to new growth points [10]

24&25Q1 消费板块综述：新消费方向崛起 [Table_Industry] 轻工制造 [Table_ReportDate] 2025 年 05 月 16 日 证券研究报告 行业研究 [Table_ReportType] 行业专题研究（普通） | [Table_StockAndRank] 轻工制造 | | | --- | --- | | 投资评级 | 看好 | | 上次评级 | 看好 | 豪悦护理主业稳健，下游客户份额提升，生育政策刺激推动代工订单改善， 24Q4/25Q1 收入同比+30%/+42%、归母净利润-28%/+6%，后续公司依 托自身生产制造优势及资源支持，有望推动洁婷逐步完成品牌焕新。 [Table_Author] 姜文镪 新消费行业首席分析师 执业编号：S1500524120004 邮 箱： jiangwenqiang@cindasc.com 信达证券股份有限公司 CINDA SECURITIES CO.,LTD 北京市西城区宣武门西大街甲127号金隅大厦 B座 邮编：100031 [Table_Title] 24&25Q1 消费板块综述：新消费方向崛起 [Table_ReportDate ...

Core Insights - The current trend in the pet food industry is focused on baked grain products, but there is a significant shift towards more refined product offerings that cater to evolving consumer demands [1][2][3] - The fifth Pet Expo held in Shanghai showcased an increase in exhibition space and participating brands, indicating sustained high demand in the pet sector [1][2] Industry Trends - The pet food market is experiencing a concentration trend, with fewer new brands emerging, primarily from overseas, as leading companies leverage their advantages in product development, funding, and brand strength [1][2] - Baked grain products remain a key focus, with sales on platforms like Tmall showing a significant increase, reaching 1.258 billion in Q1 2025, a 94% year-on-year growth [2] Product Innovation - Leading companies are intensifying their innovation efforts in baked grain products to differentiate themselves in a competitive market, with new product launches emphasizing unique nutritional benefits [3][4] - Beyond baked grains, companies are introducing a variety of functional and concept products, such as fresh meal boxes and specialized cat food targeting longevity and health [4] Marketing Strategies - The industry is witnessing a shift towards online marketing, with major brands using offline exhibitions as key marketing and sales opportunities, while smaller brands still rely on distributors for brand visibility [5] - The trend towards online sales channels is expected to continue, with companies that excel in online operations likely to capture a larger market share [5]

证券研究报告 | 行业定期报告 2025 年 05 月 12 日 成长赛道仍具看点，关注股东大会催化 食品饮料行业周报（5.11） 消费品/食品饮料 财报季正式收官，白酒高端与区域龙头平稳落地，25 年行业目标普遍审慎。大 众品表现分化，饮料/零食/宠物食品等成长性赛道仍具看点，啤酒乳制品实现 复苏，调味品相对平淡，龙头业绩更优。本周策略会反馈来看，白酒仍然承 压，大众品 4 月整体动销平稳，乳品/调味品期待 Q2 改善。 核心公司跟踪：短期白酒仍然承压，大众品整体平稳 舍得酒业：Q2 整体需求环比承压明显。舍得主品在宴席场景有双位数增 长，但在商务场景仍相对承压，预计二季度后会有好转，但行业调整期预 计仍将持续。25 年公司在去库存后轻装上阵。 水井坊：Q2 环比压力增加，淡季需求回落明显。25 年将完成井台产品的 迭代，推出 18、28 号产品。终端拓展上，2024 年新增 1 万家门店， 25Q1 新增 2.5 万家，总门店数达到 7-8 万家，根据不同门店情况制定销 售任务。分市场来看，河北增长状况良好，内蒙、山东增速也较快。 伊利股份：Q2 延续改善，奶粉双线驱动。春节动销超预期，Q1 实现正增 长 ...

Core Insights - The company reported significant revenue and profit growth for 2024 and Q1 2025, with revenues of 4.47 billion and 1.1 billion yuan, respectively, representing year-on-year increases of 19.2% and 25.4% [1] - The net profit attributable to shareholders for 2024 and Q1 2025 was 390 million and 90 million yuan, respectively, showing year-on-year growth of 68.9% and 62.1% [1] Revenue Growth - The company's main grain product revenue surged by 92% in 2024, increasing its share of total revenue by 9 percentage points to 25% [2] - Domestic revenue reached 1.4 billion yuan in 2024, up 30% year-on-year, while overseas revenue was 3.1 billion yuan, reflecting a 15% increase [2] Profitability Improvement - The company's gross margin improved by 2 percentage points to 28% in 2024, further rising to 32% in Q1 2025, driven by optimized product structure and lower raw material prices [2] Brand Development and Market Expansion - The company has established a three-brand matrix for domestic market growth, with key products including the "Wanpi Xiaojin Dung" series, leading baked grain products, ZEAL dried food, and staple canned food [2] - The company is actively expanding its overseas presence, with products sold in 73 countries and significant growth in European customers; North American market demand is high, with expansions of factories in the U.S. and Canada expected to be completed in 2026 and the second half of 2025, respectively [2] Marketing Strategy - The company has a clear marketing strategy for its three main brands, utilizing diverse channels such as influencer marketing, social media, and partnerships with national media to enhance brand recognition [3] - Sales expense ratios for 2024 and Q1 2025 were 11.1% and 11.4%, respectively, reflecting increases of 0.8 percentage points and 1 percentage point year-on-year [3] Future Projections - Revenue projections for 2025-2027 are 5.34 billion, 6.458 billion, and 7.68 billion yuan, with net profits of 452 million, 595 million, and 710 million yuan, respectively, corresponding to P/E ratios of 37.74, 28.66, and 24.02 [3]

Investment Rating - The report upgrades the investment rating of the company to "Strong Buy" [1][7]. Core Views - The company has shown significant revenue and net profit growth in Q1 2025, with revenue increasing by 25.4% and net profit by 62.1% year-on-year. The domestic brand momentum is on the rise, particularly with the "Wang Pi Xiao Jin Dun" high-fresh meat cat food, which is expected to gain market share in the mid-to-high-end cat food segment [1][6][7]. - The overseas factories have sufficient orders, and the second phase of production in Canada and the United States is expected to support North American demand, further enhancing the global supply chain layout [1][7]. - The company is expected to maintain good profitability due to low-cost structures and high capacity utilization in overseas factories, despite a slight increase in expenses due to higher marketing investments [1][6][7]. Financial Performance Summary - In 2024, the company achieved a revenue of 4.465 billion, a year-on-year increase of 19.1%, and a net profit of 394 million, up 68.9% year-on-year. The fourth quarter of 2024 saw a revenue of 1.276 billion, a 23.3% increase year-on-year, and a net profit of 112 million, up 98.2% year-on-year [6][9]. - The company's gross margin improved by 1.9 percentage points year-on-year in 2024, driven by a higher proportion of high-margin staple food products and structural optimization [6][9]. - For Q1 2025, the company reported a gross margin of 31.9%, an increase of 4.0 percentage points year-on-year, with a net profit margin of 8.3%, up 1.9 percentage points year-on-year [6][9]. Earnings Forecast - The earnings per share (EPS) estimates for 2025 and 2026 have been raised to 1.59 and 1.88 yuan, respectively, with a corresponding price-to-earnings (PE) ratio of 34x for 2025 [1][7][8]. - The company is expected to maintain a high single-digit profit margin throughout the year, benefiting from the acceleration of domestic brand market share [1][7]. Market Position and Shareholder Information - The company has a total market capitalization of 15.8 billion yuan, with a return on equity (ROE) of 16.8% and a debt-to-asset ratio of 40% [2][6]. - The major shareholder is Yantai Zhongxing Biotechnology Co., Ltd., holding a 24.8% stake in the company [2].

Financial Performance - In 2024, the company achieved a revenue of 4.465 billion CNY, a year-on-year increase of 19.15% [2] - The net profit attributable to shareholders for 2024 was 0.689 billion CNY, reflecting a growth of 3.94% [2] - For Q1 2025, revenue reached 1.101 billion CNY, up 25.41% year-on-year [2] - The net profit attributable to shareholders in Q1 2025 was 0.162 billion CNY, a significant increase of 62.13% [2] Product Performance - Pet snacks generated a revenue of 3.132 billion CNY in 2024, with a gross margin of 27.56%, accounting for 70.16% of total revenue [2] - Pet food revenue was 1.107 billion CNY, showing a remarkable growth of 91.85% with a gross margin of 34.59% [2] - The OEM business revenue was 2.616 billion CNY, up 21.21%, with a gross margin of 27.32%, representing 58.59% of total revenue [3] Regional Performance - Overseas revenue for 2024 was 3.050 billion CNY, a year-on-year increase of 14.62%, with a gross margin of 24.90%, making up 68.33% of total revenue [3] - Domestic revenue reached 1.414 billion CNY, growing by 30.26% with a gross margin of 35.18%, accounting for 31.67% of total revenue [3] Supply Chain and Production - The company operates modern production bases across multiple countries, including China, the USA, Canada, New Zealand, and Cambodia, covering all pet food categories [5] - In 2024, the company plans to expand its supply chain with new projects in North America and domestic industrial parks [5] Brand Development - The company expanded its overseas market presence, entering 9 new countries in 2024, bringing the total to 73 countries [6] - The WANPY brand underwent a strategic upgrade in 2024, enhancing brand recognition and consumer loyalty [7] - The WANPY brand launched new products, including the "Golden Shield" fresh meat food, which has received positive market feedback [8] Future Outlook - The company aims to focus on brand building, domestic market growth, and overseas expansion while maintaining a commitment to high-quality development [10] - The domestic pet food market is expected to continue growing, driven by increasing consumer demand for quality [10] - The company plans to enhance its marketing strategies to ensure efficient resource allocation and maximize value creation [11]