\u3000\u3000 Yantai China Pet Foods Co.Ltd(002891) (002891)
Key investment points
Investment logic: 1) pet track has high growth, with a market scale of about 249 billion yuan in 21 years and a compound growth rate of about 15% in recent 5 years, with broad growth space; 2) The H1 revenue of the Chinese market increased by 33.2% year-on-year in the past 21 years. The product matrix covers snacks, dry food and wet food. In the future, we will focus on brand building and promote the rapid growth of Chinese business; 3) The company continues to expand its production capacity. From 2022 to 2023, it will successively build a production capacity of 60000 tons of dry food and 20000 tons of pet wet food.
China’s pet market is in the stage of sustained high growth. There is still room for growth in China’s dog and cat food market in the future, and domestic brands are rising continuously. According to Euromonitor data, the CAGR of China’s pet food market has been 29% in the past eight years, significantly higher than the global growth level of about 4%. With the increase of single adults living alone, the acceleration of aging level, the growth of residents’ disposable income and the further change of pet rearing concept, China’s pet food industry is expected to usher in a simultaneous rise in volume and price. At present, the competition in China’s pet food market is fierce, and the overall pattern is relatively scattered. In recent years, the market share of domestic manufacturers has continued to increase. Mars, Nestle and other international manufacturers have been in a leading position in China’s main grain market through years of accumulation. The company has a product layout at the high, medium and low consumption levels. In the future, it will strengthen the development of the Chinese market, and the improvement of profitability will bring performance increment.
With high-quality products and sound brand matrix, the company’s dry and wet grain production capacity will be greatly increased in the next two years. With the new production capacity put into operation, the company will usher in deterministic performance growth. ① Products: the company has rich product categories and sound brand matrix, which can meet the multi-level needs of consumers; The company has many years of OEM / ODM experience of well-known overseas manufacturers, has export-grade product quality and excellent quality control ability, and has obtained a number of authoritative quality certificates at home and abroad; The company continues to increase R & D investment and improve product categories and quality. The company has a high launch rate of new products and is widely recognized by the market. ② In terms of production capacity: the company currently has a production capacity of nearly 60000 tons, far exceeding the level of Chinese peers. Wet grain and snacks are in a state of full production and full sales, and the utilization rate of dry grain production capacity has increased significantly in the past two years. In 2020, 30000 tons of wet grain production capacity has been completed, and 20000 tons of New Zealand high-end wet grain production capacity and 60000 tons of dry grain production capacity will be completed. With the subsequent production capacity put into operation, the company will become a pet food enterprise with balanced development of snacks and staple food.
Actively use various marketing means to vigorously develop independent brands and deeply cultivate Wuxi Online Offline Communication Information Technology Co.Ltd(300959) all channels. The company’s business in China is expected to continue to grow at a high rate. ① Marketing: the company takes naughty wanpy and Zhenzhi zeal as the core, uses Wuxi Online Offline Communication Information Technology Co.Ltd(300959) various ways to promote products, actively participates in the gathering circle of young people, improves the brand awareness of the future generation, and creates a medium and high-end high-quality brand image. Benefiting from the differentiated pricing of different brands of the company and the demand for cost-effective products in the Chinese market, the company is expected to break the situation and grow in the main grain market; The snack market has a certain brand power, and the driving force is optimistic about the company’s new product research and development and brand building in the future. ② Overseas channels: the company’s core competitiveness in overseas markets lies in its supply chain advantages. Through a series of capital operations, the company has carried out capacity layout in major overseas markets, and the company’s overseas business is expected to benefit from the stable development of resource integration. In addition, the company’s overseas customer relationship is stable, which provides a guarantee for the company’s overseas performance. ③ Chinese channels: online and offline collaborative development, in which e-commerce channels and professional channels are the company’s traditional advantageous channels. In recent years, the company has widely distributed e-commerce channels, and the growth rate of online sales is obvious.
Profit forecast and investment suggestions. It is estimated that the EPS from 2021 to 2023 will be 0.54 yuan, 0.75 yuan and 1.10 yuan respectively, and the corresponding dynamic PE will be 46 / 33 / 23 times respectively. The current market valuation is reasonable, covered for the first time, and rated as “held”.
Risk tips: exchange rate fluctuation risk, raw material price fluctuation, changes in China’s foreign trade policies, capacity construction and utilization failing to meet expectations, etc.
