Gambol Pet Group (301498.SZ): OEM Business Challenging but Domestic Remains Positive; Neutral
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Following a corporate event in Hong Kong, Goldman Sachs maintains a Neutral rating on Gambol Pet Group with a 12-month target price of RMB 75, implying an 11.9% upside from the current RMB 67 share price. Management highlighted robust domestic brand performance during the fourth quarter of 2025 and the Double 11 shopping festival, generating over RMB 1 billion in GMV, which represents a 44% year-over-year increase and aligns with expectations.
Conversely, the overseas OEM segment faces significant headwinds due to tariff impacts. Orders declined in the fourth quarter of 2025, and this pressure is expected to persist throughout 2026. Furthermore, the appreciation of the RMB and Thai Baht could negatively affect fourth-quarter OEM profitability.
On a positive note, domestic brand net margins have steadily improved since 2019, driven by gross margin expansion and stable selling expense ratios. However, overall selling expenses may rise due to a shifting sales mix toward higher-cost domestic channels. The 2025 ESOP targets reflect management's high expectations, requiring 25% revenue growth and 16% net profit growth. The company plans to launch a major new product by mid-2026. The Thailand facility operates at 70-80% capacity utilization, while the New Zealand plant currently has no definitive expansion plans. Risks include foreign exchange volatility, raw material costs, and intense online channel competition.