Yuanfei Pet released its 2023 three-quarter report. In the first three quarters of 23 years, the company achieved revenue of 731 million yuan, a year-on-year decrease of 6.71%, net profit of 104 million yuan, a year-on-year decrease of 24.56%; of these, Q3 single-quarter revenue was 301 million yuan, an increase of 27.51% year on year, net profit of 38 million yuan, an increase of 6.52% over the previous year, and net profit after deducting 37 million yuan from the previous year, an increase of 27.23% over the previous year. The company's 23Q3 revenue and net profit growth have both accelerated, and operations have improved.
Gross margin has rebounded, and net interest has remained at a high level. 23Q3's gross profit margin was 22.8%, up 2.7 pct year on year, 1.9 pct over month, net profit margin 14.4%, down 2.6 pct year on year. In terms of expenses, the Q3 sales/management/R&D/finance expense ratio was +0.8/-1.0/-0.7/+6.4pct year-on-year, respectively, and -0.4/-0.5/-0.5/-0.5/+9.6pct month-on-month respectively, with good cost control.
Overseas demand is yet to be repaired. The company's main products include traction tools and chewing gum snacks. Among them, the demand for chewing gum snack products is resilient due to their high-frequency consumption attributes: traction tools are relatively high quality and durable, and short-term demand is under pressure. At the same time, the company is also taking the initiative to develop new customers through exhibitions and actively promote them. At the same time, the company is also taking the initiative to develop new customers through exhibitions and actively promote them. A recovery in export business can be expected.
Actively lay out the domestic market. In August '23, Wind Display established Hangzhou Yuanfei Digital Technology Co., Ltd. and established Haleway Digital Technology Co., Ltd., which is mainly responsible for building a global e-commerce ecosystem for Yuanfei Pet's online channels in the domestic market, helping to diversify domestic channels. The company's Pikap and Cuffie Comfort brands, which focus on cat products and functional dog training products, have a lot of room for expansion in segmented fields. Products such as Pikapu's freeze-dried snacks and cat litter have also been developed and launched one after another.
Profit forecasts and investment advice. The company is a leading exporter of pet equipment, has strong product design and industrialization capabilities, and positions high-end fashion attributes. It is pressured by the downgrade of overseas consumption and short-term demand, benefiting from the long-term expansion and growth of pet racing tracks. Furthermore, the company is actively developing the domestic market, and domestic sales are expected to accelerate. Net profit is estimated at 13/1.5/180 million yuan for 23-25 million yuan, keeping the company's judgment of a reasonable value of 16.99 yuan/share unchanged, corresponding to the 24-year valuation of 21 times PE, maintaining a “buy” rating.
Risk warning. Overseas demand falls short of expectations, risk of loss of major customers, changes in the trade environment between China and the US, exchange rate fluctuations, raw material price fluctuations, increased market competition, and project investment risks.