Tianyuan Pet: the world's leading supplier of multi-series and full-range pet products. Tianyuan has been ploughing pet products for more than 20 years, and has formed a perfect global supply system and high flexible production capacity. The overseas market is basically strong and stable. At the same time, the company is acutely aware of the strong demand for high-end pet staple food in the local market. Actively layout the pet staple food track to create new growth attractions. In the first half of 2022, the company's overseas business income was 572 million yuan, accounting for 66.23%, with a gross profit margin of 24.80%; domestic pet food business revenue was 197 million yuan, accounting for 22.75%, with a gross profit margin of 14.10%. As of the third quarter of 2022, the company's net interest rate was 6.28%.
Overseas basic market: excellent flexible production capacity, "overseas warehouse" strategy to small B.
1) the overseas market is characterized by "large-scale, steady growth and weak brand". The size of the global pet products market has increased from US $33.419 billion in 2017 to US $44.763 billion in 2021, with a compound annual growth rate of 7.58% and a broad market space (about nine times that of China in 2021). At the same time, affected by the characteristics of a wide range of pet products, the mature European and American pet products market concentration is also low, failed to form a brand effect.
2) with high flexible production capacity, the company has been cooperating steadily with overseas big B customers for many years, and the scale has increased year by year. The one-stop and multi-frequency purchase demand of large overseas buyers has given birth to a multi-production line and small batch production mode of pet products, which requires suppliers to have a higher flexible production capacity. Tianyuan is located in Zhejiang Province, with a natural flexible production gene, at the same time with the help of efficient supply chain management system continues to grow its own flexible production capacity, forming a high customer satisfaction and stickiness, and the income scale is increasing year by year. From 2018 to 2021, the company's overseas operating income increased from 820 million yuan to 1.321 billion yuan, and increased by 23.56% in 2021 compared with the same period last year.
3) quickly respond to the change of customer structure and lay out the overseas warehouse and Rio Tinto PLC's small B end. The rise of overseas e-commerce has given birth to many small B-end customers, which means that orders are smaller and more decentralized, resulting in high transportation costs. The company conforms to the trend of the times and develops the overseas warehouse sales model, and will continue to develop the overseas warehouse model in the future, establishing production bases in Australia, the United States, Europe and other places to help the company solve the problems such as low product density, high freight and so on. At the same time, it also shortens the distance with small B-end customers, which helps the company to further develop small B-end customers.
Domestic high growth: the layout of high-end staple grain, "food with supplies" model for the company's strong channel capacity.
1) overseas brands in the domestic pet high-end staple food market still occupy an absolute advantage, and overseas enterprises represented by Mars and Nestle occupy most of the high-end pet food market. The company was promoted to a first-class distributor in 22 years, eager for and Aiken to take two hard currencies to help the company's main grain business rise. In the first half of 2022, the company's pet food sales revenue was 197 million yuan, an increase of 19.52% over the same period last year, with a gross profit margin of 14.10%, an increase of 5.58% over 2021. In 23 years, the company will continue to introduce two well-known overseas staple grain brands, Bilimag and Prena, which belong to different subdivision tracks with the original agent brands, which will promote the further growth of the company's staple grain sector.
2) at present, the concentration of domestic pet industry is still low, and there are more precipitating profits in the channel. The company develops channels with high-end pet staple food to deepen the customer stickiness of terminal stores; at the same time, develop a pet hair platform to further enhance the channel control ability and improve its own profit level. In the long run, the deep ploughing channel is conducive to the timely promotion of its own brand and the smooth completion of the extension transformation from ODM to the brand end.
Fund-raising projects: after the completion of "Huzhou Tianyuan technological Transformation and upgrading Project" and "Hangzhou Hongwang production Base Construction Project", a total of 2.315 million sets of cat climbing capacity and 3.93 million sets of electronic pet products production capacity have been added to help the company expand the production capacity of core products and further improve the company's revenue capacity. At the same time, logistics, research and development, online efforts, for the company's channel construction, platform transformation of supporting facilities construction, and further enhance the market competitiveness of enterprises.
Investment advice: the company's overseas basic market profit is stable, the domestic business is growing rapidly and the profitability is strong. We estimate that the company's operating income from 2022 to 2024 will be RMB 2.220, respectively, with a year-on-year growth rate of 19.71%, 29.25% and 19.66%, respectively. The corresponding net profit from 2022 to 2024 will be 1.20 won, 1.70 / 198 million yuan, an increase of 11.67%, 42.43% and 15.42%, respectively. The EPS is 1.33,1.89,2.18 yuan per share respectively, and the current stock price corresponding to PE is 28,20,17 times. According to the comparable company valuation method, the company is given a 23-year 24XPE, and the target price is about 45 yuan. at the same time, the conclusion drawn from the absolute valuation is cross-verified by referring to the discounted cash flow valuation method. Cover for the first time and give a "recommended" rating.
Risk hints: exchange rate fluctuation risk, international political and economic environment change risk, production mode depends on outsourcing risk, brand agency business renewal risk.