China Pets (002891): Pet food marketers can boost domestic growth
The investment highlights for the first time covered China Outback (002891) with an outperform rating on the industry with a target price of 32.
00 yuan, corresponding to 53 times P / E in 2020.
The reasons are as follows: The pet snack market is developing rapidly and has a long-term space: the domestic pet food market size was 59.4 billion in 2018, of which the pet snack market size was about 10 billion US dollars. We expect the pet snack market to exceed 20 billion in 2022. 2018?
The CAGR in 2022 is about 19%. The driving force for growth lies in the increase in the dominance of income for human beings, the transformation of concepts, and the lonely economic development.
In the competitive landscape, the current concentration of the industry has decreased. In 2018, CR2 and CR5 were about 12% and 20%, respectively. We judge that companies will seek breakthroughs through brand building and category accumulation, driving the industry’s long-term concentration.
The product line and brand system are perfect, and the internal depth synergy: The company 无锡桑拿网 focuses on pet snacks and cooperates with the staple food business to form a product matrix. At the same time, the brand system comprehensively covers the low-end to high-end, with high-end and independent brand strengthening as the development direction.
In terms of different markets, overseas businesses have deep accumulation, expansion through cost advantages and experience replication, and positive changes in the face of challenges. At the same time, the company’s planning of internal business will be the focus of future development strategies. The company will take advantage of offline channels to accelerate the development of e-commerce channels.In particular, once Tmall rises, the growth rate obviously increases.
On the whole, we expect that the overseas business will moderate and grow in the future, and the domestic business will accelerate, which will drive the company to achieve high growth.
Expansion of production capacity and expansion of the industrial chain, long-term growth is worth looking forward to: Expansion, the company’s continuous production capacity expansion, we judge that in the short term, it will resolve the expansion of production capacity and consolidate the main business of pet snacks; gradually accelerate the development of canning business, increase the scale of income and profitability;To enhance the development space; reorganization, the company extended the industrial chain, layout of pet supplies and medical care, and broadened the long-term development territory.
What makes us different from the market?
We are more optimistic about the company’s internal business development prospects. Through the strengthening of brand and channel construction and the release of new production capacity, its market share and performance growth can be expected.
Potential catalysts: improved product structure and profitability of the company; reduced cost pressure; improved domestic business competition; and eased trade frictions.
Earnings forecasts and estimates We expect the company’s EPS for 2019/20/21 to be 0 respectively.
83 yuan, CAGR is 52%.
The current contradiction corresponds to 76/45/33 times P / E in 2019/20/21.
Comprehensive DCF estimation and the company’s historical estimation center, given a target price of 32.
0 yuan, corresponding to 89/53/39 times P / E in 2019/20/21, + 18% space.
The first coverage gives an outperforming industry rating.
Risks Overseas orders are growing rapidly; domestic market development is less than expected; risks of raw material price fluctuations; trade barrier risks; food safety risks; exchange rate fluctuation risks.