Trade frictions weighed; premium staples in focus: Maintain Buy but cut TP to CNY16.12, implying 18.0% upside

Research evidence excerpt

Trade frictions weighed; premium staples in focus: Maintain Buy but cut TP to CNY16.12, implying 18.0% upside

Nomura | Petpal 15 June 2026

Company profile

Petpal is one of the earliest domestic companies in China to specialize in pet food. In functional and health-oriented pet chews,

the company has built deep technical know-how and large-scale manufacturing capabilities across a broad range of high-

quality pet food products. It has established long-standing partnerships with a number of leading global pet food companies,

with products sold across multiple countries and regions and shipment volumes ranking among the highest globally. Petpal has

continued to pursue an international production strategy, and has built manufacturing bases in Vietnam, New Zealand and

Cambodia, among other markets. The company’s product portfolio spans premium staple food, pet treats and other pet food

categories.

Valuation Methodology

Our target price of CNY16.12 is based on a target P/E of 28x and our 2026F EPS of CNY0.58. The target multiple is above the

peer average, reflecting our expectation of faster earnings growth vs. peers. The benchmark index for the stock is the CSI 300

Index.

Risks that may impede the achievement of the target price

Intensifying competition in the domestic market; trade frictions; and rising raw material prices.

ESG

Petpal places strong emphasis on ESG and integrates environmental protection, social responsibility and corporate

governance considerations across its operations. On social responsibility, the company continues to strengthen its supply chain

management, maintain rigorous product safety controls, and explore green production technologies, supporting the pet food

industry’s shift toward greener and lower-carbon development.