Reporter | Zhao Yangge
After nearly 10 months of ciccumb counseling without results changing to Zhongtai Securities, The Pet has finally come to the step of the meeting. According to the arrangement, the GEM Listing Committee will review the first launch of The Baby Pet on July 27.
Good baby pet on the meeting
According to the data, the registered capital of Baobao Pet is 360 million yuan. Liaocheng City, Shandong Province, registered in Shandong Province, was established on June 26, 2006, the controlling shareholder and actual controller Qin Hua held 50.8496% of the shares, KKR held 21.1974%, Beijing Legend held 10.2953%, at the end of 2021, the scale of The Pet Company developed to 3932 people, and the operating income and net profit scale were 2.575 billion yuan and 140 million yuan, respectively.
The main products include the staple food series of scientific nutrition formula, the snack series with livestock and poultry meat, fish and other raw materials, and the health care product series containing functional raw materials such as freeze-dried lecithin and calcium lactate.
In the domestic market, the company has its own brand "McFudi", with its own brand sales revenue of 1.33 billion yuan in 2021 and an average annual compound growth rate of 37.29% in its own brand sales revenue from 2019 to 2021. During the reporting period, the company also invited singer and actor Nicholas Tse, male singing group INTO1 member Yoon Ho-woo and Korean rock band Royal Pirates member Lee Baht as the company's image spokesperson to enhance the brand influence of "McFudi". In addition to the above-mentioned private brands, the company continues to lay out the high-end pet food market by representing New Zealand brands "K9Natural" and "Feline Natural".
In foreign markets, through the production of pet food OEM/ODM products, Qibao Pet has established cooperative relations with wal-Mart, Smark, Pinpu and other international well-known enterprises, and the products are sold to North America, Europe, Japan and South Korea and other overseas regions. In 2021, the company continued to deploy foreign markets through the acquisition of the famous American pet food brand "Waggin'Train". At present, there are 961 dealers owned by Baobao Pet, and 166 dealers above designated size (annual sales of more than 500,000 yuan), accounting for 94.06% of the distribution revenue.
From the perspective of raw materials, the main ingredient accounts for nearly 60%, and the most of the main ingredients is chicken breast, followed by duck breast, which can account for nearly 30%. According to the description, from March 1995 to March 2005, Qin Hua successively served as deputy general manager, general manager and vice president of Shandong Fengxiang Group. Shandong Fengxiang Group mainly uses white feather broilers to produce muscle products, and the core company Fengxiang shares were listed on the Stock Exchange on July 16, 2020. There are also several executives with the resume of Shandong Fengxiang Group in the current management of Baobao Pet.
The financing plan of The Baby Pet is 600 million.
Peers in listed companies
Mars is an American multinational founded in 1911 that manufactures and markets snacks (candy and chocolate), pets, staple foods and electronics. Purina is part of the Nestlé Group, a world-renowned food and beverage company headquartered in Switzerland, and has several world-renowned pet brands.
The local company, 002891.SZ, was established in January 2002, mainly engaged in the research and development, production and sales of dog and cat pet food, its own brands are "Wanpy", "Zeal", "Dr.Hao", "Happy 100", "King Kitty", "Jerky Time", etc., the product line covers a comprehensive range, covering dry food, wet food, snacks, tooth bones, biscuits and other categories. In 2021, the main business income of Zhongpet Co., Ltd. was 2.786 billion yuan and the net profit was 126 million yuan. The operating income of Zhongpet shares mainly comes from overseas markets, and the total overseas income of Zhongpet shares accounts for about 76.03% of operating income in 2021.
Petty Shares (300673.SZ) was established in October 2002. The company is mainly engaged in the research and development, production and sales of pet food, the main products are animal skin bite glue, plant bite glue, nutritious meat snacks, bird food and edible small animal toys, baked biscuits and other products, its brands include "Tooth Energy", "Knight's Banquet", "Haoshijia" and so on. In 2021, the main business income of Petty Co., Ltd. was 1.267 billion yuan, and the net profit was 62.0562 million yuan. In 2021, the total overseas income of Petty shares accounted for about 83.45% of total revenue. Animal skin bite glue and plant bite glue are the main sources of petty shares' revenue, accounting for about 65.11% of the total revenue in 2021.
Lusi Co., Ltd. (832419.BJ) is mainly engaged in the production, sales and research and development of pet food, the main products include dried meat products, pet canned food, pet biscuits, pet teeth and bones and other categories, its brands include "Luce", "Kingman", "Guanjun" and "Handicraft Workshop" and so on. In 2021, the main business income of Lusi Co., Ltd. was 458 million yuan and the net profit was 30.4807 million yuan. In 2021, the total overseas income of Lusi shares accounted for about 83.43% of the total revenue. Dried meat products are the main source of luce shares' revenue, accounting for about 85.8% of the total revenue in 2021.
Another Fubei pet is mainly engaged in the research and development, production and sales of pet food, and its brands include "Bile", "Aibei" and "Pinzhuo". The main business income of Fubei Pet in 2020 is 664 million yuan, of which 51.23% is 340 million yuan of dog food and 47.6% is 47.6% of cat food is 316 million yuan. Fubei Pet conducted a pre-disclosure on June 28, 2021, the listing sector is the Shanghai Main Board, and the pre-disclosure update was made on December 17, 2021, and there is no complete data for 2021 in the prospectus.
The interface news reporter noted that the registered place of Zhongpet shares is Yantai City, Shandong Province, and the registered place of Lusi shares is in Shouguang City, Shandong Province, plus Baobao Pet, and the competition between Pet Food Companies in Shandong is even worse.
Struggling to promote?
The data shows that the operating income of Baobao Pets in 2019 and 2021 was 1.403 billion yuan, 2.013 billion yuan and 2.575 billion yuan respectively, and the increase in 2020 and 2021 was 43.47% and 27.92% respectively; The net profit was 4.1602 million yuan, 111 million yuan and 140 million yuan respectively, and the year-on-year growth rate in the last two years was 2579.75% and 25.82% respectively.
According to public information, the operating income of Qibao Pet is expected to be 1.63 billion to 1.68 billion yuan from January to June 2022, an increase of 50.57% to 55.19% year-on-year, and the net profit attributable to the mother after deduction of non-deduction is 117 to 127 million yuan, an increase of 200.58% to 226.27%. Both operating income and net profit fluctuate greatly.
In this regard, Baobao Pet said that the performance growth rate in 2022 will be improved again, one is the enhancement of its own brand power, the other is the addition of the American own brand (Waggin'Train) business and brand agency (K9Natural and Feline Natural) business, and the third is to grasp the market demand for consumption upgrades and constantly push new.
It is worth mentioning that the company's sales expenses in 2019 and 2021 were 246 million yuan, 341 million yuan and 459 million yuan respectively, and the amount was constantly pushed up, accounting for 17.53%, 16.93% and 17.84% of the operating income in each period, respectively. High costs have a certain impact on the scale of the company's operating profits, taking the words of The Treasure Pet itself, if the industry growth slows down, the market scale shrinks and other adverse changes occur in the future, if the company's marketing plan cannot achieve the expected effect, the company may face the risk of continuous growth in sales expenses but slowing down the growth rate of revenue. Judging from the performance of the data in 2021, this risk exists. Related issues have also been asked by regulators, but from the expected data of 2022, the investment is returning, waiting for the latest data of the company.
The risk of failure of the U.S. lawsuit
In addition, the lawsuit involving the pet is inextricable.
【NPIC Case】
In April 2017, The Pets established The United States to manufacture and sell products in the United States, mainly in the main categories of staple food and dried meat jerky. In November 2017, GoodBrow USA hired Natural Polymer International Corp. Former employee Zhu Jie of NPIC (hereinafter referred to as "NPIC") served as COO, and Zhu Jie introduced Pinghua Lei, a former employee of NPIC at the time, dr. Shin-ShiChen and ChiungYing Chen, to join Qibao USA, with Lei Pinghua as the head of research and development, and Chen Xinxi and Chen Qiongying serving in the quality control department.
In April 2018, NPIC sued Jie Zhu, Pinghua Lei and Qiongying Chen in Texas court for breach of the corresponding non-compete and/or confidentiality agreements signed with NPIC by the former employees of NPIC; In June 2018, NPIC additionally sued Chen Xinxi, Qibao AMERICA and the company, alleging that Chen Xinxi violated the non-compete agreement signed with NPIC, and that the company and Qibao America had embezzled NPIC's trade secrets through Zhu Jie and Lei Pinghua. In September 2018, Baobao America fired Zhu Jie, Lei Pinghua, Chen Xinxi and Chen Qiongying.
The Pet never responded in a state court proceeding, and The Company disputed the court's jurisdiction and claimed special appearance under Texas law to seek to set aside the case. On May 22, 2020, NPIC withdrew all of its claims against the Company and GoodBo America in state court proceedings, but retained all of its claims against former employees of NPIC.
Unexpectedly, on May 15, 2020, NPIC sued Qibao Pet, Qibao America, Qin Hua and Li Zhaowei in federal court, claiming that the defendants were: (1) misappropriated trade secrets in violation of federal and Texas laws; (2) improperly interfered with non-compete and confidentiality agreements signed by NPIC with its former employees; and (3) conspired to steal NPIC's trade secrets. NPIC requires the defendant to pay damages totaling not less than $225,000 and asserts punitive damages applicable under local law; In addition, NPIC sought a permanent ban on defendants from using NPIC trade secrets.
Based on The Court Coleman's knowledge of the facts of the case, Yate Coleman believes that if NPIC ultimately wins the case, the most likely damages in this case will range from $500,000 to $1.5 million. Also because of the above lawsuits and other factors, The Pet Subsidiary of The Company has not actually conducted business in the United States and has basically stopped operating. In the prospectus, The Pet also disclosed the "risk of failure of the U.S. lawsuit."
【Appearance Patent Infringement Dispute】
On January 27, 2022, Shandong Hongfa, a subsidiary of Qibao Pets, received a Civil Ruling issued by the Jinan Intermediate People's Court on January 6, 2022, recording that the applicant, Yantai Alice Zhongpet Food Co., Ltd. (hereinafter referred to as "Alice Zhongpet"), applied to the Jinan Intermediate People's Court for preservation measures against the evidence related to the design patent of Qibao Pet and Shandong Hongfa suspected of infringing the design patent owned by it under the name of "Pet Food (Meat Skewer)" (patent number ZL201530150238.8). Based on this, the Jinan Intermediate People's Court ruled that the following preservation measures should be taken against Qibao Pets and Shandong Hongfa: the export data of the meat skewer products with the commodity code of 23091090 from November 30, 2018 to November 30, 2021 from Jinan Customs of the People's Republic of China were transferred to Jinan Customs of the People's Republic of China, and the above export products were sampled.
Since then, Baobao Pet immediately engaged Beijing Chaocheng Law Firm (hereinafter referred to as Beijing Chaocheng) to provide legal services for the response to the appearance patent infringement dispute. Beijing Chaocheng has applied to the State Intellectual Property Office on behalf of the company to declare the patent in question invalid. On March 15, 2022, the State Intellectual Property Office (SIPO) accepted the request for invalidation on March 15, 2022, in compliance with the relevant provisions of the Patent Law and its Implementing Rules and Examination Guidelines.
At present, the case is still in the process of tug-of-war.