The company's recent situation
Gaibao Pet recently attended the CICC Mid-Year 24 Strategy Meeting. The company exchanged views with investors on industry trends, the 618 situation, and high-end progress. We believe that domestic pet food is still in a golden period of development with a sharp rise in volume and price. As a leading domestic pet food with a strong brand mentality, Gaibao has excellent category innovation, excellent brand incubation capabilities, and obvious channel first-mover advantages. It is expected to lead the optimization of the pattern, and continued release of performance can be expected.
reviews
Situation 618: McFudi ranked first in all platforms. Flegart and BARF have strong growth potential, and the company is not very dependent on big promotions. 1) The total revenue of independent brands across the network: According to the 618 War Report, the company's 618 brand sales exceeded 470 million yuan, an increase of more than 40%, ranking first in the overall ranking of Tmall and Douyin for four consecutive years, and first and second in Pinduoduo/JD; 2) High-end series doubled: the high-end sub-brand Frégart's entire network sales exceeded 100 million yuan, an increase of more than 230%, and ranked 8th and 5th overall on the Tmall and Douyin platforms. The high-end sub-series BARF has net sales of more than 44.3 million yuan, an increase of 126%; 3) Innovative forward-looking layout: the company is gradually reducing its dependence on the company due to its main product high-frequency repurchase characteristics and its own brand stickiness. Baked fresh baked dog food is in the Tmall Best-Selling Dog Food Top 2 list, and freeze-dried BARF is winning the Tmall freeze-dried cat snacks top seller list 2; 4) Reducing dependency on the company due to the high frequency repurchase characteristics of its main products and its own brand stickiness 618 Sales accounted for a percentage of the whole year or below the industry average, and revenue showed a healthy high level Qualitative growth.
Customized innovation for Chinese pets creates strong product strength, and continues to incubate new fissile brands to enhance brand power.
We believe that 1) category innovation: Gaibao continues to create product lines more suitable for Chinese pets and pet owners, explore the needs of pets and pet owners through basic research and development, and launch innovative product lines such as double food, lamb and milk, fresh meat, raw meat, etc.; 2) Brand incubation: Gaibao digs deep into the pet food segmentation circuit, and continues to fission sub-brands based on category and concept innovation. For example, the high-terminal brand Frégart, which is based on the concept of high fresh meat feeding, has successfully incubated and is growing. It can strongly drive the optimization of the company's product brand matrix upgrade. According to data from Jiuqian and Flying Melons, from January to May '24, Fregat accounted for 19.9% of Gaibao's online sales, +11.1ppt compared to the previous year.
Online content capture e-commerce opportunities, the share of high-profit direct sales has increased, and offline first food rations have been steadily deployed.
We believe that 1) Online: Gaibao forwardly captures content-based e-commerce opportunities and first publishes platforms such as Bukuai. According to Feigua data, the McFuddy Douyin platform had the highest market share in 23 years, reaching 8.9%. At the same time, the company also continues to increase the proportion of high-profitability direct sales and continuously optimize the online channel structure; 2) Offline: The company is expected to rely on high-end sub-series such as Frégart and BARF to lay out the first food rations for offline pet houses, continue to develop an incremental customer base, achieve offline drainage and online repurchase, and open up a closed loop of online and offline channels.
Profit forecasting and valuation
The profit forecast remains unchanged. The current stock price corresponds to 41/32 times P/E in 24/25, maintaining the outperforming industry rating and target price of 69 yuan, corresponding to 50/40 times P/E in 24/25, with 24% upward space.
risks
Increased competition in the domestic market; fluctuations in raw material prices and exchange rates; trade frictions and overseas business risks.