Fubei Pet is the leading supplier of pet food in China. Since its inception, the company has focused on pet food research and development, production and sales, at this stage, the main products include dog food, cat food and other pet dry food staple food. The company always adheres to the production and management concept of "quality is life", devotes itself to providing healthy and safe high-quality pet food and scientific feeding programs for pets, and has a high market reputation in the field of pet food production and manufacturing. with "NetEase, Inc Yan Xuan" and other comprehensive well-known brands and many domestic well-known pet food brand customers have established a stable cooperative relationship. In the first half of 2021, the company achieved an operating income of 434 million yuan and a net profit of 103 million yuan.

The company's main products are divided into dog food, cat food and other products three categories, the income of each product has maintained a good growth trend. In 2020, the company's dog food business income was 340 million yuan, YoY+34.69%, accounted for 51.21% of the total income; cat food business income was 316 million yuan, YoY+112.13%, accounted for 47.58%; other products and business income was 8.02 million yuan, YoY+16.98%, accounted for 1.21%. 2021 H1 company dog food business income 210 million yuan, accounting for 48.31%; cat food business income 219 million yuan, accounting for 50.44%; other products and business income 5.45 million yuan, accounting for 1.26%. Thanks to the continuous expansion of the company's domestic sales channels and brand promotion, the company's core products dog food and cat food sales revenue have maintained a good trend of continuous growth. Among them, because pet cats have the advantages of more convenient feeding, relatively small activity area and do not need to take up too much time compared with pet dogs, the growth rate of sales revenue of cat food is higher than that of dog food, and the proportion of sales revenue increases year by year.

The company's product sales are mainly non-network channel sales, and mainly concentrated in East China, South China. In 2021, the proportion of non-network channel sales revenue of H1 company reached 84.68% and 86.68% respectively. Affected by the regional consumption level, pet breeding scale and other factors, in 2020, non-network channels accounted for 52.11% and 11.76% of non-network channels in East China and South China, respectively. The proportion of sales of H1 non-network channels in East and South China was 53.89% and 11.72%, respectively. From 2018 to 2020, with the rise of Internet e-commerce channels, consumers' online consumption habits and the continuous improvement of the company's own brand market recognition and brand awareness, the company's share of sales revenue through online B2C, e-commerce platforms and other online channels has increased.

The company's sales gross profit margin and net profit margin are relatively stable. In 2020, the gross profit margin of the company was 42.15%, and the net profit rate was 0.53 pct; the net profit rate was 24.98%, and the net profit rate was 24.02%, which was 40.67% and 24.02% respectively. As the company continues to strengthen investment in product research and development, improve the ability of R & D innovation, enhance the market reputation of the company's products, expand brand awareness, and improve production efficiency and reduce unit production costs through large-scale and automation transformation, we believe that the company's profitability will maintain continuity and stability.

The company's sales expense rate is high, the R & D expense rate is at the average level, and the financial expense rate is very low. In 2020, the sales / management / R & D / financial expense rates of the company were 8.45%, 3.42%, 1.86% and-0.10% respectively. The sales / management / R & D / financial expense rates of the company-3.85pct,-3.53pct, + 0.04pct and-0.12pctscape 2021 H1 were 8.04%, 2.58%, 1.42% and-0.88%, respectively. From 2018 to 2021H1, the sales expense rate of the company is higher than that of comparable companies listed in the same industry (Zhongjong shares, Patty shares), mainly because the overall salary level of the company in Shanghai is relatively high, and the company builds a professional sales team to promote its own brand and open up the domestic market, which leads to a relatively high proportion of sales staff's salary to business income; the R & D expense rate is comparable to that of listed companies in the same industry. The financial expense rate is very low because the company does not borrow money from financial institutions.

Risk tips: raw material prices fluctuate, market competition intensifies, and sales channel maintenance and expansion fall short of expectations.