Yantai China Pet Foods Co.Ltd(002891) (002891)
After more than 20 years of deep cultivation of pet track, it is a leading enterprise of domestic pet food.
The company is the earliest pet food enterprise in China. It has been deeply ploughing the track for more than 20 years. Its main business is pet snacks with export quality. It started with overseas ODM / OEM. Its products are exported to more than 50 countries and regions such as the United States, Britain and Japan. At this stage, the company continues to enrich the product brand matrix, layout pet dry food, wet food, canned food, etc., and vigorously develop its own brands. Its well-known brands, including wanpy naughty, zeal Zhenzhi, etc., are leading, and have developed into a leading enterprise of domestic pet food.
China's pet market has great potential, and the epidemic has dragged down the gradual end.
From 2010 to 2020, the scale of China's pet consumption market rose sharply from 14 billion yuan to 206.5 billion yuan, with a compound annual growth rate of 30.9%. In 2020, the scale growth of China's pet consumption market slowed to 2%, and it will still maintain a low growth rate in 2021. We believe that the main reason for the slowdown in growth from 2020 to 2021 is that the outbreak of covid-19 has significantly increased the downward pressure on the economy and delayed the entry of potential PET consumers into the market. In the medium and long term, the penetration rate of pets in China is 17%, while that in the United States, Australia, Britain and Japan is as high as 68%, 62%, 45% and 38% respectively; The number of dogs and cats per capita in China is 0.03 and 0.04 respectively. The annual consumption expenditure of pet dogs and cats in China is US $869 and US $679 respectively, which are lower than that of major pet breeding countries. China's pet consumption market has great growth potential.
The overseas market was steady, and the sales revenue increased steadily.
The company's revenue and profits mainly come from overseas markets. 1h2021's overseas sales revenue accounts for 75% of its main business revenue. The company's products are sold to the United States, the European Union, Japan and other countries and regions. Its main customers are local pet food dealers with brands, and the revenue of the top five customers accounts for nearly 50%. From 2013 to 2020, the company's overseas revenue rose sharply from 459 million yuan to 1.641 billion yuan, with a compound annual growth rate of 20%; 1h2021, the company's overseas revenue was 945 million yuan, a year-on-year increase of 25.3%. The company's testing center is the only pet food and feed production enterprise laboratory recognized by CNAs in the world, which can meet the basic requirements of different importing countries on the quality and safety of pet food. The company strictly controls the product quality and realizes zero mistakes in history. Since 2014, the company has successively invested in the construction of factories in the United States, Canada, New Zealand and Cambodia, continuously improved the global layout, and gave full play to its supply chain advantages in product R & D, quality control and cost control. The company has realized localized production and localized sales through overseas investment and construction, so as to avoid the risks brought to the enterprise by changes in international politics, economy and external environment, Improve the company's anti risk ability and profitability.
Vigorously expand the Chinese market and enhance the influence of independent brands.
The company's sales revenue in China accounted for 24.9% of its main business revenue. From 2013 to 2020, China's revenue rose sharply from 43 million yuan to 538 million yuan, with an annual compound growth rate of 43.6%. 1h2021's China revenue reached 313 million yuan, a year-on-year increase of 33.2%. The company has formed a development idea of taking snacks as the first category and going hand in hand with dry food and wet food; In terms of brand operation, the company implements the brand strategy with "wanpy naughty" and "zeal Zhenzhi" as the core, and caters to the needs of various market segments through different brand positioning. In September this year, the company acquired 50% of the leading equity in Hangzhou, now holds 90% of the leading equity in Hangzhou, and will also help develop the leading market. The company has steadily invested in sales expenses, and the proportion of sales expenses, sales expense rate, promotion expenses and promotion expenses is basically at the highest level among listed pet companies and companies to be listed; The company has refined the layout of all channels and opened a new growth curve for new retail business. Through IPO, issuance of convertible bonds and additional issuance, the company raised funds and investment projects have been put into operation. It is expected that the company will realize the production capacity of more than 20000 tons of pet snacks, 60000 tons of pet cans and 70000 tons of pet dry food. It is worth looking forward to the rapid growth of sales in the future.
Investment advice
The company is a high prosperity and growth track for pet food, vigorously developing its own brand and Chinese business, and is a leader in China's pet food industry. We expect that from 2021 to 2023, the company's main business revenue will reach 2.859 billion yuan, 3.76 billion yuan and 4.861 billion yuan, with a year-on-year increase of 28.1%, 31.5% and 29.3%, corresponding to the net profit attributable to the parent company of 145 million yuan, 200 million yuan and 347 million yuan, with a year-on-year increase of 7.1%, 38.7% and 73.2%, corresponding to eps0.01% 49 yuan, 0.68 yuan, 1.18 yuan.
The company started with overseas OEM, built its own brand and expanded its business in China in recent years, and has formed a two-line parallel mode of business in China and abroad. As the Chinese business is in a period of rapid growth and the foreign business is in a period of stable growth, we adopt the segment valuation method, the PE valuation method for overseas business and the PS valuation method for Chinese business. We give the company 20 times PE for overseas business in 2022, corresponding to a market value of 6 billion yuan; Give 6 times PS to Chinese business, corresponding to a market value of 5.67 billion yuan. In conclusion, the target market value of the company in 2022 is RMB 11.67 billion, corresponding to the target price of RMB 39.68, and the "buy" rating remains unchanged.
Risk warning: exchange rate fluctuation risk; China's market development did not meet expectations; The production capacity is lower than expected; Price fluctuation of raw materials; Pet food safety issues; Core customers account for a large proportion; Brand building was less than expected.
