In the past three years, US pet stocks have risen 10 times. This year, the stock prices of two pet food foundries in A shares doubled. So what will happen to Boqi.com?

The cute pet economy has become a star track that has attracted much attention this year. In the environment of “dogs and cats”, pet-related stocks have shown explosive growth this year.

Among A shares, Petty Stock and China Pet, the two major pet food foundries With the rise of the pet economy, the stock price has doubled. FreshPet in the US stock market has risen nearly 10 times in three years.

As an e-commerce company in the pet vertical field, “Pochnet” also submitted a prospectus this year .

So, what is the pet economy? Can Boqi.com become the leader in the segmented industry?

Meng pet economy

The pet economy has risen rapidly in recent years. With the aging of the domestic society and the declining birthrate, pets have gradually become a must-have for the home, especially, The popularity of eating for one person and living alone makes pets an indispensable part of modern life.

According to data from the China Industry Information Network, the global pet market in 2019 reached 149.5 billion U.S. dollars, equivalent to more than one trillion yuan. EUR Economic’s research report shows that the largest pet market in the world is Europe and the United States, occupying more than 60% of the market share, and North America has a 37% share. Among them, the United States, as the world’s largest pet market, after years of development, the market size in 2019 reached 42.8 billion U.S. dollars, and maintained a positive growth of 5.1%. Asia, as the world’s third largest market, has a market share of 24%.

Source: Guosheng Securities

According to data from iiMedia Consulting, China’s pet industry reached a market size of 170.8 billion yuan in 2018, with a growth rate of nearly 30%. It is estimated that by 2020, the market size will reach 300 billion yuan.

From the data point of view, there is still a big gap between the domestic pet economy market and foreign countries. However, considering that the structure of the main domestic consumption force has begun to turn, many office workers prefer to raise cats because of their busy work. After the middle-aged and elderly people encounter the tide of retirement, they start to raise dogs for their emotional companionship.

According to the statistics of China’s pet industry white paper, the consumption of dog owners on a single pet dog is 6,082 yuan/year, a year-on-year increase of 9.0%; the consumption of cat owners on a single pet cat is 4755 yuan/year, a year-on-year increase 10.3%. Generally speaking, the investment in dogs is higher than that in cats, but the consumption of cats is growing faster.

At the same time, the report also stated that my country’s pet market in 2019 reached 202.4 billion yuan, an increase of 18.5% year-on-year. It is expected that the average annual growth rate will continue to be more than 15% in the next five years. 236.6 billion yuan.

Therefore, in the long run, with the European and Americanization of domestic living habits, the pet economy has recently become one of the hottest tracks.

The impact of the epidemic on pet economy

After the severe epidemic in the first half of the year, pet consumption began to show obvious demand stimulus from offline to online. Especially those who are mainly pet foodDemand, has driven the development of pet e-commerce.

Although domestic logistics was blocked at the beginning of the year due to the epidemic, both online and offline were affected by the supply side, but after the recovery of domestic logistics in March, online rigid demand consumption rebounded retaliately. According to a report by Founder Securities, many companies’ online revenue channels have seen significant growth this year, and after the outbreak of the overseas epidemic, overseas orders have not shown a significant decrease. The two domestic OEM/ODM export businesses mainly A listed pet food company has nearly doubled its share price this year.

This also reflects from the side that even if the epidemic has affected the global logistics system, after domestic production and work resumed, overseas rigid needs have recovered well.

At the same time, the epidemic has also accelerated the clearance of production capacity in the pet industry. In the past, many companies were small in scale and had a high degree of retail investors. Some stores were more operated as “husband and wife” stores or small start-ups, which could not withstand the impact of the epidemic. The gap between the supply and demand of pet services has led to an increase in the concentration of the pet market.

Does Poqinet have a chance?

Currently, domestic pet e-commerce platforms are basically in a state of being divided into the top two.

Source: Guosheng Securities

The white paper of the pet industry shows that among the online platforms, Tmall/Taobao and JD.com are the most used platforms, and Boqi.com ranks third.

According to Boqi.com’s prospectus, GMV is standard ranking, the Ali platform deserves it The first, occupying 60% of the market share, the second-ranked JD.com accounted for 3.7%, and the third-ranked Boqi network accounted for 1.9%.

However, Boqi.com mentioned on September 8After submitting the U.S. stocks prospectus application, it will soon raise US$115 million in the U.S. stock market. In recent years, the pet industry has always been the favorite of the financing market. In recent years, not only the A-share IPOs of Petty and China Pet, but the entire primary and secondary markets have a soft spot for the pet industry.

Under the sluggish primary market in recent years, China’s pet industry received a total of 32 financings in 2019, with a total financing amount of 5.41 billion yuan. Among them, pet medical, pet food and pet e-commerce three sub-sectors The largest number of financings and the largest amount.

Source: Guosheng Securities

All this shows that the capital market is still optimistic about the development prospects of pets, especially the domestic market share is still far from developed countries in Europe and America.

According to the “2019 China Pet Industry White Paper” statistics, there are currently about 100 million canine and cat pets in my country, of which 55.03 million are pet dogs and 44.12 million pet cats. The national household pet ownership rate is only 4.4%, and the highest in Shanghai is only 19.8%, while the pet ownership rate in the United States has reached 68%. At present, the average number of pets per household in my country is about 0.2, Japan is about 0.5, and the United States is 1.4. From the perspective of the number of pets per household, the number of pets in my country still has room for more than double growth.

Source: Guosheng Securities

Therefore, from the perspective of the development of the pet industry, this track is still wide and long enough. Even in the United States, where the pet industry is already very developed, there have been 10 times the number of big bull stocks in 3 years.

FreshPet is an American pet food company. From November 2016 to the beginning of 2020, it has increased nearly 10 times in three years.

Source: Tianfeng Securities

FreshPet has been in line with a growth rate of 25% since 2013-2018. Due to channel and marketing expenses, by the end of 2019, it still has not achieved profitability, and the market still has high expectations despite the increase in revenue and profit. .

According to the report of Tianfeng Securities, in the past three years, along with the company’s revenue growth, its valuation level has also increased significantly. The average valuation level in 2017 is about 4 times PS. In 2018, the company’s revenue increased by 23.5% year-on-year, which was significantly higher than the 17.5% growth rate in 2017. The company’s valuation has also increased from 4 times PS to 8 times PS; the company’s revenue growth rate further increased in 19 years, with a year-on-year growth of 27.2% in the first three quarters , The valuation has climbed all the way to 12 times PS.

For Boqi.com, FreshPet is also very valuable. Although Boqi.com is a platform company dominated by e-commerce, its assets are lighter than traditional pet food manufacturing. In pets, a sufficiently large industry, Boqi.com is currently at a loss. As long as future revenue and user growth can continue, the capital market is bound to give it the same high valuation.

If Boqi.com is issued at a price of $12 in the IPO ceiling range, and the underwriter exercises the oversubscription right, Boqi Pet’s valuation will exceed 1.1 billion U.S. dollars, which is close to 10 times PS, which is basically at the top of US stocks’ valuation of the pet industry . If the price can be at a relatively low level, then in a foreseeable future, pet e-commerce will still have better investment opportunities.

After all, in the pet vertical field, there is currently no listed company integrating community and e-commerce. Therefore, from a long-term perspective, the scarcity premium will become the biggest advantage of Boqi.com.