Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 130.00 [8][6] Core Insights - The company has established itself as a leading player in the domestic pet food market through continuous product innovation, channel development, and effective marketing strategies [1][18] - The company has successfully navigated various competitive pressures by leveraging consumer insights and iterating on product offerings, which has created a strong product barrier [19][20] - The company has effectively captured online channel benefits and has seen significant growth in direct sales, with a 75% year-on-year increase in 2022 [3][21] Product Development - The company has focused on consumer trend insights to drive category and process innovation, establishing a core product barrier [2][19] - From 2014 to 2019, the company utilized high-cost performance products to gain market share, transitioning to high-end products from 2020 to 2023 [2][19] - The company plans to focus on brand strength and product upgrades in the coming years, with a strong emphasis on technological innovation and collaboration with top universities [19][20] Channel and Marketing Strategy - The company has strategically entered major e-commerce platforms early and has adapted its sales strategies to different channels [3][21] - The marketing approach has evolved from broad-based campaigns to more focused emotional marketing, enhancing brand connection with consumers [3][21] - The company has streamlined its distribution system to focus on brand self-operated models, improving direct control over channels and user engagement [3][21] Organizational Efficiency - The company's management team possesses complementary professional skills, with a focus on high-performance incentives for core teams [4][18] - The average age of the management team is 47.5 years, with a mix of experienced and younger professionals driving the company's growth [4][18] - The company has implemented stock and performance incentives to align the interests of core team members with long-term company goals [4][18] Market Perspective - The report argues against market skepticism regarding the company's growth ceiling, citing the diverse dietary choices in the Chinese pet market and the company's ability to adapt to consumer trends [5][18] - The company is projected to have significant revenue growth potential, with estimates suggesting 4.4x and 8.8x growth for its brands in the medium to long term [5][18] Profit Forecast and Valuation - The company is expected to achieve net profits of RMB 7.50 billion, RMB 9.64 billion, and RMB 12.54 billion for the years 2025 to 2027, respectively [6][11] - The report assigns a price-to-earnings ratio of 54x for 2026, reflecting the company's strong organizational efficiency and market position [6][11]

Core Viewpoint - The company reported strong revenue and profit growth for 2024 and Q1 2025, driven by high-end product sales and improved gross margins, leading to an upward revision of the target price to 130 yuan and a "buy" rating [1][2][4]. Group 1: 2024 Performance - In 2024, the company achieved revenue of 5.25 billion yuan, a year-on-year increase of 21%, and a net profit attributable to shareholders of 625 million yuan, up 46% year-on-year [1]. - Domestic sales reached 3.55 billion yuan, growing 24% year-on-year, with high-end products like 麦富迪 and 弗列加特 seeing significant growth [2]. - The gross margin improved to 45.6%, an increase of 6.4 percentage points year-on-year, reflecting the rising contribution of high-end products and effective brand premium [2]. Group 2: Q1 2025 Performance - In Q1 2025, the company reported revenue of 1.48 billion yuan, a year-on-year increase of 34.8%, and a net profit of 204 million yuan, up 37.7% year-on-year [1]. - Domestic sales are expected to grow over 40%, driven by high sales of 弗列加特 and barf series products [3]. - The gross margin for Q1 2025 was 41.6%, a year-on-year increase of 0.42 percentage points, indicating sustained profitability despite slight fluctuations [3]. Group 3: Profit Forecast and Valuation - The profit forecast for 2025 has been adjusted down to 790 million yuan, a decrease of 6%, while the 2026 forecast remains unchanged at 1.12 billion yuan [4]. - The company is valued at 65.5 times the expected earnings for 2025, reflecting its strong market position and brand barriers [4]. - The target price has been set at 130 yuan, maintaining a "buy" rating based on the company's leading position in the domestic pet food market [4].