Key investment points:

The company is one of the largest domestic pet products manufacturers. The company was founded in 2004. Since its establishment, the company has focused on R&D, production and sales of pet products and pet food, and is one of the earliest enterprises to enter the pet industry in China. The company has now formed a business layout with pet products and pet food as the core, covering various categories such as pet traction equipment, pet injection toys, pet snacks, etc., and has accumulated high-quality customer resources. Currently, the company has long-term, stable and continuous cooperation with internationally renowned specialty pet product chains and large retail chains, and customers are spread all over the United States, Europe, Japan and other countries and regions where the pet market is well developed. At present, the company has become a large-scale domestic manufacturer of pet products and has an advantageous position in the field of pet traction equipment.

The company has formed a global research, production and sales layout system. The company has set up cutting-edge research teams and R&D centers at its subsidiaries in the US and Shanghai, respectively. Based on the advantages of raw materials and production costs, the company has put into operation a total of 4 production bases, which are located in Pingyang County, Zhejiang Province and Cambodia, respectively.

In order to deal with international trade frictions, the company began preparations for overseas factory construction in 2018, and finally chose to build a factory in Cambodia, which was completed in 2020. Currently, the company has two production bases in Cambodia, namely Cambodia's Aitao, which mainly focuses on pet food, and Cambodia Ryde, which is wholly owned by the company, and Cambodia Ryde, which mainly focuses on pet products, and in the second half of 2024, Cambodia Ryder added a pet toy production line. In addition, the production base invested by the company in Bangladesh in November 2023 is mainly used as a production line for pet food, gelatin, leather, etc., and is expected to be gradually put into use in 2025. In terms of sales, the company's subsidiaries in the US, Shanghai and Hangzhou are respectively responsible for overseas marketing, brand operation and domestic markets, forming a relatively complete sales system for domestic and foreign markets.

China's pet food market is expected to expand rapidly. In 2024, the size of China's pet (dog and cat) market will exceed 300 billion yuan. Multiple factors will drive the expansion of China's pet market in the future. China's economic development and per capita income continue to rise; future aging and declining birthrate will lead to a continuous rise in demand for pet companions.

Compared with mature markets in Europe and America, there is still a lot of room for improvement in the penetration rate of pet breeding and the average annual expenditure of a single pet in China. Currently, the competitive pattern in China's pet market is scattered, and there is still a lot of room for improvement in the market concentration of high-quality domestic enterprises.

Investment advice: The company's 2024-2025 EPS is expected to be 0.81 yuan and 0.96 yuan, respectively, and the corresponding PE is 19 times and 16 times, respectively. The size of China's pet market is expected to continue to expand, the market concentration is still low, and high-quality domestic enterprises are expected to benefit. The company continues to enrich its categories, continues to step up efforts to develop domestic and foreign markets, and has a global research, production and sales layout, and future development can be expected. First coverage, giving the company a “buy” rating.

Risk warning. Risks such as exchange rate fluctuations, trade frictions, increased competition, and domestic and foreign market development.