China Pet Holdings (002891) 2018 Annual Report Comments: Expansion of Domestic Market Investment Short-term Performance Pressure

China Pet Holdings (002891) 2018 Annual Report Comments: Expansion of Domestic Market Investment Short-term Performance Pressure

[Investment Highlights]China Pet Corporation released the 2018 annual report and 2019 first quarter report.

In 2018, the company achieved operating income of 14.

120,000 yuan, an increase of 39 in ten years.

09%; net profit attributable to shareholders of listed companies was 0.

56 ‰, a decrease of 23 per year.

39%, slightly lower 苏州夜网论坛than the performance forecast and our expectations.

The company achieved operating income in 20191.

810,000 yuan, an increase of 37 in ten years.

45%; Net profit attributable to shareholders of listed companies is 0.

07 million, a decrease of 45 per year.


Domestic business income grew rapidly and its proportion increased.

In 18 years, the company vigorously promoted the construction of the domestic market and its territorial business income2.

5.2 billion, an increase of 61 in ten years.

54%, accounting for 15% of total revenue from 2017.

36% rose to 17.


In terms of overseas business, the company is also actively exploring new customers and increasing the stickiness of old customers. Overseas business revenue has achieved a steady growth of 35%.

Gross profit margin decreased, and the expense ratio increased during the period, which dragged down performance in the short term.

The company’s pet snack products, which accounted for more than 80% of its revenue, had a 3% decline in gross profit margin in 18 years, mainly due to the rapid rise in manufacturing costs.

In terms of expenses, the sales expense ratio actually increased by 107%, mainly due to the expansion of the domestic market, so office travel, publicity services, employee compensation and other expenses increased significantly.

In addition, the company’s R & D expenses increased significantly by 1349.

21%, mainly due to the company’s increased investment in core technology research and technological transformation.

Overall, the company’s comprehensive gross profit margin was 23 in 18 years.

31%, down 1.

5pct, three-fee rate of 13.

35%, up 0.

39 points.

In addition, the company’s inventory loss in 18 years was relatively high, and its investment income changed from positive to negative, which also had a certain impact on its performance. The company’s 18-year net interest rate4.

36%, a decrease of nearly 4 monomers.

Construction of fundraising projects was completed, and production capacity was further increased.

The company’s annual output of 3,800 tons of biscuits, small calcium bones, and dentition bone pet food projects and the expansion of 5,000 tons of dried pet food production line expansion projects have been replaced in 2018. The company’s product production in 20183.

In June, the output was increased by about 8,000 tons compared with the previous year, and the production-sales ratio was 118%.

In February 19, the company issued convertible bonds for the construction of a pet wet food project with an annual output of 3, at which time the company’s production capacity will gradually increase.

Revenue in the first quarter grew steadily and net profit margins were under pressure.

In the first quarter, the company further explored the domestic market, and its total revenue increased by 37.

45%, but the sales expense ratio increased due to market investment2.

64pct, increase in R & D expense ratio and decrease in investment income, net profit in the first quarter2.73%, a decrease of 3 per year.


[Investment recommendation]With the reduction of future production capacity and the divergence of the domestic market, especially online channels, the company’s revenue maintains a high growth rate. The company is currently in the domestic market development period and needs a lot of expenses to brandAnd channel construction, while increasing R & D investment to enhance core competitiveness, short-term performance will be under pressure and earnings forecasts will be lowered.

The company’s 19/20/21 revenue is expected to be 18.都市夜网



10,000 yuan, net profit attributable to mother 0.



390 thousand yuan, EPS0.



39 yuan, corresponding to PE 49.



87 times, maintaining the “overweight” level.

[Risk reminder]Trade friction risk; exchange rate fluctuation risk; domestic market development is less than expected risk.