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].

Investment Rating - The report maintains an "Increase" rating for the pet food industry, indicating a favorable outlook for the sector's fundamentals and expected performance relative to the market benchmark [3]. Core Insights - The pet food industry is experiencing significant growth, with domestic brands outperforming foreign competitors due to a trend of domestic substitution. Leading domestic brands like Guai Bao Pet and Zhong Chong Co. are showing impressive sales growth and profitability [1]. - Guai Bao Pet's main brand, Mai Fu Di, has maintained the top position on Tmall for five consecutive years, achieving a 150% year-on-year sales increase during the 2024 Double 11 shopping festival. The company reported a revenue of 5.245 billion yuan in 2024, a 21.22% increase year-on-year, with a net profit of 625 million yuan, up 45.68% [1]. - Zhong Chong Co. has developed a strong portfolio of proprietary brands and reported a revenue of 4.465 billion yuan in 2024, a 19.15% increase year-on-year, with a net profit of 394 million yuan, up 68.89% [1]. - Petty Co. also showed strong performance with a revenue of 1.659 billion yuan in 2024, a 17.56% increase year-on-year, and a remarkable net profit growth of 1742.81% [1]. - The report highlights the increasing consumer focus on experience-driven pet care, with new retail formats emerging that combine product offerings with services, catering to the evolving needs of pet owners [2]. Summary by Sections Company Performance - Guai Bao Pet achieved a revenue of 5.245 billion yuan in 2024, with a net profit of 625 million yuan, reflecting a strong growth trajectory [1]. - Zhong Chong Co. reported a revenue of 4.465 billion yuan in 2024, with a net profit of 394 million yuan, showcasing robust brand performance [1]. - Petty Co. reached a revenue of 1.659 billion yuan in 2024, with a net profit increase to 1.82 billion yuan, marking a historic high [1]. Market Trends - The pet food sector is identified as the largest segment within the pet industry, driven by the essential nature of pet care throughout their lifecycle [1]. - The report notes a shift towards high-end market opportunities due to uncertainties in tariffs, which may benefit companies with strong proprietary brands [1]. Investment Opportunities - The report suggests focusing on companies with strong channel strategies and innovative product offerings, such as Tian Yuan Pet and Yi Yi Co., as well as those expanding into smart pet care solutions [3]. - Companies like Guai Bao Pet and Petty Co. are highlighted for their impressive growth in proprietary brand sales, indicating potential investment opportunities [3].

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]