GaiBao Pet is a leader in the domestic pet food industry. Established in 2006, Gaibao Pet Food Group Co., Ltd. is mainly engaged in R&D, production and sales of pet food, and is a leader in the domestic pet food industry. In 2023, revenue reached 4.327 billion yuan, up 27.34% year on year; net profit to mother reached 429 million yuan, up 60.62% year on year. In 2023, the company's private brand business revenue was 2,745 billion yuan, up 34.15% year on year, accounting for 63.44% of total revenue. The OEM/ODM foundry business achieved revenue of 1,407 billion yuan, an increase of 18% over the previous year. In 2023, the growth rate of independent brands was impressive, and the proportion of high-margin products continued to increase.
The growth trend of the Chinese pet market has not changed, and the leading market share has increased. The Chinese pet market is in a period of continuous growth. According to the “White Paper on China's Pet Industry” published by the Big Data Platform, the scale reached 279.3 billion yuan in 2023, up 3.22% year on year. The growth rate has slowed slightly, but the growth trend has not changed. Compared with foreign brands, the product gap between domestic brands is narrowing, and the time is right to replace domestic brands; compared to emerging brands that rely on the Internet, large brands with complete supply chains and their own factories have a development advantage. According to Euromonitor International data, the company's domestic market share increased from 2.4% to 4.8% in 2015-2022, doubling, ranking first among domestic brands in terms of market share.
The brand building path is clear, the product, channel and marketing are integrated, and the profitability is leading the industry. The company has achieved multi-category market coverage, is one of the domestic pet companies with the richest product layout, and has both quality and cost performance. On the channel side, deep integration of online and offline sales has been achieved, and the company's direct sales revenue share continues to rise, driving significant profits; in terms of marketing, all-round, three-dimensional marketing, the company's sales expenses reached 721 million yuan in 2023, accounting for 16.66% of total revenue, and a compound growth rate of 34.03% in 2018-2023. Targeting young people, Gaibao Pet vigorously carries out pan-entertainment marketing, hires celebrity ambassadors, and continues to enhance the popularity, credibility and influence of its own brands.
Overseas provides the company with stable profits. The overseas OEM business, which mainly focuses on snacks, provides Kwai Bao with stable profits and supports the company in seeking breakthroughs in building its own brand with higher gross margin and more potential for development. Since its establishment in 2006, the company has continued to be deeply involved in overseas OEM business, and its products are sold to North America, Europe, Asia and other places. The US is the company's main exporter. With stable product quality and good commercial reputation, the company has established long-term cooperative relationships with major global retailers and well-known pet brand operators such as Walmart, Smack, and Spectrum.
Profit forecast: As a leader in the pet food sector, the company's 2023 and 2024Q1 performance increased significantly year-on-year. We adjusted the company's 2024-2026 revenue to 56.19/73.09/9.438 billion yuan, and net profit to mother of 584/7.73/96 billion yuan, corresponding to PE 41/31/25 times. Future changes in the domestic market competition pattern will benefit leading enterprises with stable supply chains, continuous R&D capabilities, and high product quality. The pet sector is expected to maintain a high growth rate and maintain a “buy” rating in 2024.
Risk warning: risk of trade friction; risk of poor expansion of overseas markets; risk of fluctuations in raw material prices; risk of exchange rate fluctuations; risk of increased competition in the domestic market.