Petpal Pet Nutrition Technology (300673.SZ): US Order recovery & New Zealand Factory Ramping-up; Growing domestic while more investment

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Petpal Pet Nutrition Technology (300673.SZ): US Order recovery & New Zealand Factory Ramping-up; Growing domestic while more investment

Goldman Sachs Petpal Pet Nutrition Technology (300673.SZ)

n Order review & outlook: 2Q26 order volume & yoy growth were broadly in line with

1Q, with shipments still expected to grow at a HSD% rate with meaningful sequential

improvements. Mgmt said the U.S. market has stabilized as tariff and cost

expectations become clearer, supporting more proactive ordering and inventory

build-up, while end-demand is still expected to grow at a HSD% in 2026. Europe is

expanding faster and is expected to grow c.15% yoy in 2026. Order visibility is also

improving, with some 3Q production already scheduled and quarterly shipments

likely to become more balanced. Overall, mgmt expressed confidence for export

OEM sales to return to growth in 2026, supported by U.S. recovery, continued

expansion in non-U.S. markets, and stickier customer relationships in niche products

such as pet chews, where the company is a key supplier.

n Profitability: Raw material price volatility (i.e. chicken) reduced 1Q26 GPM by c.1

ppt, but costs stabilized in 2Q26 and procurement prices have been trending down,

so management still targets a broadly stable 2026 GPM, roughly in line with last year.

On fx, RMB appreciation has weighed on export earnings since last year, mgmt

shared manageable medium-term FX losses if RMB/USD exchange rate stays around

6.8. Management expects some FX losses in 1H26 to be offset by slight

improvements into 2H26, ideally with full-year FX impact to breakeven.

n Tariff and cost-sharing: U.S. customers developed more stable tariff expectations

since 2025, supporting a recovery in orders and inventory build-up. Mgmt shared