Group 1 - The pet food industry continues to show strong growth, with online sales increasing by 28% to 4.7 billion yuan in the first ten months of 2025 [1] - Domestic brands are experiencing a clear differentiation in rankings, with brands like Guobao, Xianlang, and Jingu leading, while brands like Blue and Honest One are declining [1] - The market share of top brands is accelerating, with the online CR3 and CR5 for pet food at 12.1% and 16.2% respectively, up by 2.2 and 2.8 percentage points year-on-year [3] Group 2 - Guobao is rapidly growing despite a high base, with its own brand sales reaching nearly 1.1 billion yuan, up 44%, and high-end product series accounting for 47% of total sales during Double Eleven [2] - Zhongchong's mid-to-high-end brand series is successfully incubating, with sales exceeding 100 million yuan during Double Eleven, a year-on-year increase of over 100% [2] Group 3 - The focus of leading domestic brands is on increasing market share, with a potential rise in marketing expenses in the short term, but long-term profit margins are expected to recover as competition stabilizes [3] - The industry is currently in a mid-stage of competition, with brands prioritizing revenue and market share growth, which may lead to an increase in overall marketing expense ratios [3]

Core Viewpoint - The company reported a significant increase in revenue and net profit for the first half of 2025, driven by strong growth in its domestic brand and product segments, despite challenges in the export business and trade friction affecting margins [1][2][3]. Financial Performance - In 1H25, the company's revenue increased by 32.72% year-on-year to 3.221 billion yuan, with net profit rising by 22.55% to 378 million yuan. In 2Q25, revenue grew by 30.99% to 1.741 billion yuan, while net profit increased by 8.54% to 174 million yuan [1]. - The gross margin improved, with 1H25 gross margin at 42.4%, up by 0.71 percentage points year-on-year, and 2Q25 gross margin at 43.4%, up by 1.04 percentage points [3]. Growth Trends - The company's domestic brand sales outpaced industry growth, particularly in the mid-to-high-end product lines such as Freka and BARF, with online sales for Freka increasing by 138.2% year-on-year in the first half of 2025 [2]. - The direct sales channel's contribution to revenue rose to 37.7%, with a 40% increase in revenue from third-party platforms [2]. Product and Channel Development - The company experienced a shift in product and channel structure, leading to an increase in gross margins for its main grain products, while snack product margins were pressured by trade friction [3]. - The main grain products achieved revenue of 1.88 billion yuan, up 57% year-on-year, indicating a strong performance in the high-barrier, high-stickiness brand segment [2][3]. Strategic Initiatives - The company has launched a new stock incentive plan aimed at achieving ambitious revenue targets of 6.55 billion yuan in 2025, 8.02 billion yuan in 2026, and 9.64 billion yuan in 2027, positioning itself to potentially surpass Mars as the industry leader [4]. - The pet food market is viewed as a significant growth opportunity, with the company leveraging its strong brand and product capabilities to lead in this sector [4]. Profit Forecast and Valuation - The profit forecast remains unchanged, with the current stock price corresponding to 52x and 43x P/E for 2025 and 2026, respectively. The target price is set at 118 yuan, indicating a potential upside of 22% [5].