The global layout of Zhongpet Co., Ltd. has an annual revenue of 3.7 billion yuan, and the decline in raw material costs has helped net profit to double continuously

Yangtze River Business Daily News ● Yangtze River Business Daily reporter Wang Jing

Expand the global market, Zhongpet shares (002891. SZ) has delivered a good palmares.

On the evening of April 22, Zhongpet Co., Ltd. released its 2023 annual report. In 2023, Zhongpet Co., Ltd. will achieve an operating income of about 3.747 billion yuan, a year-on-year increase of 15.37%, and a net profit of about 233 million yuan, a year-on-year increase of 120.12%.

According to the first quarter report of 2024 released on the same day, the company's net profit continued to grow rapidly, with a year-on-year increase of 259%.

Zhongpet Co., Ltd. is mainly engaged in the research and development, production and sales of pet food for dogs and cats. The growth of the global pet industry market size is the main reason for the rapid growth of the company's performance, and at the same time, the decline in the price of raw materials such as white feather chickens has also helped the company's profit growth.

With the development of the domestic pet economy, Zhongpet shares have increased their investment in the domestic market, and in 2023, the company's domestic operating income will be 1.086 billion yuan, a year-on-year increase of 20.15%, and the proportion of revenue will increase to 28.97%.

Lower raw material prices led to growth

On the evening of April 22, Zhongpet Co., Ltd. released its 2023 annual report, in 2023, Zhongpet Co., Ltd. achieved operating income of about 3.747 billion yuan, a year-on-year increase of 15.37%, and a net profit of about 233 million yuan, a year-on-year increase of 120.12%.

According to the first quarter report of 2024 released on the same day, during the reporting period, Zhongpet Co., Ltd. achieved an operating income of 878 million yuan, a year-on-year increase of 24.42%, and a net profit of 56.2243 million yuan, a year-on-year increase of 259%.

The company's comprehensive gross profit margin increased to 26.28% in 2023 and 27.85% in the first quarter of this year.

Zhongpet Co., Ltd. said that in 2023, the company will adhere to the core of independent brand building, focus on the domestic market, actively expand overseas markets, steadily build a global industrial chain layout, domestic and overseas business will grow steadily, and the profitability will continue to improve.

At present, the main products of China Pet Co., Ltd. include more than 10 product series in pet staple food, pet wet food, pet snacks and other categories, totaling more than 1,000 varieties.

In terms of types, in 2023, the operating income of pet snacks, canned pet food, pet staple food, pet supplies and others will be about 2.351 billion yuan, 635 million yuan, 577 million yuan and 185 million yuan respectively, accounting for 62.74%, 16.94%, 15.39% and 4.93% of the company's total revenue, and the gross profit margin will be 25.39%, 32.62%, 29.06% and 7.06% respectively.

At present, the core raw materials of Zhongpet Co., Ltd. are concentrated in the chicken and duck categories. According to Shanghai Ganglian data, the average comprehensive selling price of white feather broiler segmentation in the first quarter of this year was 9730.38 yuan/ton, while the average value in the first quarter of 2023 was 11370.28 yuan/ton, a year-on-year decline of 14.42%.

This has also led to a decrease in the cost of raw materials in Zhongpet. The direct material cost of Zhongpet Co., Ltd. will decrease from 1.066 billion yuan in 2022 to 872 million yuan in 2023, and the proportion of direct material cost in operating cost will decrease from 42.52% to 33.07%, a year-on-year decrease of 9.45 percentage points.

Domestic market revenue accounted for 28.97%

According to public information, Zhongpet Co., Ltd. was founded in 1998 and is headquartered in Yantai, Shandong, with core brands such as "Wanpy Naughty" and "Zeal Zhenzhi".

According to Common Thread data, in 2022, the global pet industry will reach $261 billion, a year-on-year increase of 12.5%. From 2022 to 2027, the global pet industry will grow at a CAGR of 6.1% and reach a scale of $350 billion. Among them, the United States is the world's largest pet breeding and consumer country, followed by Europe, Japan and emerging markets such as Vietnam in Southeast Asia.

From 2019 to 2022, the company's overseas operating income was 1.373 billion yuan, 1.691 billion yuan, 2.191 billion yuan and 2.346 billion yuan respectively, accounting for 79.98%, 75.73%, 76.03% and 72.24% of the revenue respectively.

In 2023, Zhongpet Co., Ltd. will achieve operating income of 2.662 billion yuan in the overseas market, a year-on-year increase of 13.44%, accounting for 71.03% of the revenue. Zhongpet Co., Ltd. said that due to the inventory adjustment of foreign customers, the company's export business has declined since September 2022 and will continue until the first quarter of 2023. In April 2023, with the end of customer inventory adjustment, the company's export business returned to normal, and the company's overseas business resumed its growth momentum.

After years of development, Zhongpet Co., Ltd. has production capacity in 5 countries: China, the United States, Canada, New Zealand and Cambodia, and has a complete supply chain advantage. In recent years, the company has put forward the strategic policy of "focusing on the domestic market, focusing on independent brands, and focusing on staple food products", relying on the implementation of this strategy, the company has increased its investment in the domestic market, and the scale of sales revenue in the domestic market has continued to grow.

From 2019 to 2022, the domestic market revenue of Zhongpet Co., Ltd. was 343 million yuan, 538 million yuan, 689 million yuan, and 902 million yuan respectively, accounting for 19.97%, 24.11%, 23.92%, and 27.76% respectively. In 2023, the company's domestic operating income will be 1.086 billion yuan, a year-on-year increase of 20.15%, and the proportion of revenue will increase to 28.97%.

According to the "2023-2024 China Pet Industry White Paper", in 2023, the market size of China's pet industry will reach 279.3 billion yuan, an increase of 63.52% compared with 2018, and the market size will continue to grow.

It is worth noting that the gross profit margin of the domestic market is significantly higher than that of the overseas market. In 2023, the company's gross profit margin in the domestic market will be 31.28%, and the gross profit margin in the overseas market will be 25.22%. With the expansion of domestic business, Zhongpet shares are expected to further open up growth space.