Yuanfei Pet was founded in 2004 and has become a large-scale supplier of pet products in China. The company is mainly engaged in the research and development, production and sales of pet products, including pet snacks, pet traction appliances, pet injection toys and other products. The company's customers are concentrated in the United States, the European Union, Japan and other countries and regions, and has long-term, stable and continuous cooperation with internationally renowned professional pet product chains and large international chain retailers. The company's operating income and profits will continue to grow in 2021. In 2021, the company realized operating income of 1.069 billion yuan, an increase of 75.71% over the same period last year, and a net profit of 154 million yuan, an increase of 82.94% over the same period last year.

The company's products mainly include pet traction appliances, pet snacks, pet injection toys and other pet products. The business income of pet traction equipment in 2021 was 613 million yuan, accounting for 57.60%, an increase of 74.20% over the same period last year. Pet traction equipment, as the company's core product, has grown rapidly in recent years, mainly due to the annual increase in the purchase of the company's original customers and the improvement of the company's production capacity. Pet snack business income 353 million yuan, accounting for 33.14%, an increase of 58.21% over the same period last year Pet injection toy business income was 11 million yuan, accounting for 1.03%, down 21.72% from the same period last year. The business income of other pet products was 88 million yuan, accounting for 8.23%, an increase of 395.75% over the same period last year. The growth rate in recent years is relatively fast, mainly due to the enrichment of pet household products with the development of the market, of which the income from pet clothing business is 62 million yuan, accounting for 70.81% of other pet products. It is the main source of the growth of other pet products.

The company's products are mainly export sales, in which the developed pet economy in North America and Europe is the company's main sales area. From 2019 to 2021, the company's overseas sales revenue accounted for more than 94%. Among them, the company's revenue in North America reached 783 million yuan in 2021, accounting for 73.63%, an increase of 92.13% over the same period last year; revenue in Europe reached 174 million yuan, accounting for 16.32%, up 36.42% over the same period last year; and revenue in Asia reached 18 million yuan, accounting for 1.66%, down 19.46% from the same period last year. Revenue in South America reached 53 million yuan, accounting for 4.95 percent, an increase of 150.38 percent over the same period last year, while revenue in Oceania reached 2 million yuan, accounting for 0.19 percent, an increase of 98.13 percent over the same period last year. In comparison, the company's domestic sales accounted for a relatively low proportion. In 2021, the company's domestic sales revenue was 34 million yuan, accounting for 3.24%, an increase of 26.09% over the same period last year, mainly because the domestic pet products market is still in its infancy.

Profit forecast and rating: we expect the company's net profit from 2022 to 2024 to be 1.92,2.55 and 352 million yuan respectively, an increase of 40.7%, 32.6% and 38.1% respectively over the same period last year. The current closing price corresponds to 23,18 times PE in 2022-2023. As a leading enterprise in pet products, the company, with reference to comparable companies, gave the company a valuation of 26,28x PE in 2022 and a reasonable value range of 36.70,39.53 yuan, giving it a "better than the market" rating.

Risk tips: raw material prices fluctuate, market competition intensifies, and domestic market development is not as expected.