Goldman Sachs Petpal Pet Nutrition Technology (300673.SZ): First take: FY25/1Q26: 4Q25 NI miss on weaker sales, fx loss; 1Q26 soft with margin pressure
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Goldman Sachs published a rapid review of Petpal Pet Nutrition Technology (300673.SZ), highlighting significant earnings misses for both 4Q25 and 1Q26. The firm maintains a Neutral rating with a 12-month target price of Rmb14.6, suggesting a potential 10.4% downside from the current share price of Rmb16.29.
In 4Q25, revenue reached Rmb360 million, falling 7% below Goldman Sachs expectations. Net profit was a mere Rmb2 million, representing a sharp miss versus the expected 3.0% net margin. This disappointment was driven by weaker sales, declining gross margins due to rising raw material costs, and unfavorable foreign exchange impacts. The weakness persisted into 1Q26, with net profit plummeting 64% year-over-year to Rmb8 million and gross margin contracting to 27.6%, as elevated financial expenses pressured profitability.
A detailed breakdown of 2025 reveals structural weaknesses. Only pet treats registered revenue growth, while other categories like rawhide chews and dry food contracted significantly. Furthermore, overseas sales, which constitute the majority of revenue, declined 15% year-over-year, overshadowing stable domestic performance. The company declared a final dividend of Rmb0.25 per share, equating to a 54% payout ratio. Management will hold an online briefing on April 28, where investors will closely monitor management's commentary on overseas export orders, domestic brand strategies, and the raw material cost outlook.