The pet industry has a history of development in developed countries for more than a hundred years, and pet-related industries are very mature. In recent years, the global pet products market has grown steadily. Domestically, with the improvement of people's economic level, changes in ideological concepts, as well as the aging of the population and the growth of single and DINK groups, the domestic pet industry has entered a period of rapid development. Hangzhou Tianyuan Pet Products Co., Ltd. (hereinafter referred to as "Tianyuan Pet") is based on the design, development, production and sales of pet products and actively expands pet food sales business. Its products cover pet nest mats, cat climbing frames, pet food, Pet toys, pet clothing, electronic supplies and other series and full categories of pet products.

In terms of performance, Tianyuan Pets’ operating income has shown a continuous growth trend in recent years. Among them, Tianyuan Pet's operating income has a compound growth rate of 32.97% in the past three years, "leading" comparable companies in the industry, highlighting its growth potential. As an industry pioneer that entered the pet industry earlier in China, Tianyuan Pet relies on the comparative advantages of the domestic pet products industry chain and the international pet food supply chain to focus its core business on high value-added links such as product development and customer service, achieving the goal of Rapid response and continuous service to the diversified, one-stop purchasing needs of domestic and foreign downstream customers. After nearly two decades of exploration, innovation, and accumulation, Tianyuan Pets has established sustained competitive advantages and formed core competitiveness in terms of high-quality customer resources, supply chain management systems, multi-category product development, and collaborative sales of supplies and food.

1

The global pet products market is growing steadily, and the domestic pet market is ushering in rapid development

The pet industry has a history of development in developed countries for more than a hundred years, and it is closely related to the pet industry. The related industries are very mature. The domestic pet industry started relatively late, but with the improvement of people's economic level, the change of ideological concepts, the aging of the population and the growth of single and DINK groups, keeping pets has become a kind of emotional sustenance for people, and people get warmth and warmth from pets. With companionship, the pet economy has developed rapidly. As pet owners pay more attention to pet emotions and other aspects, the pet products industry will continue to grow.

According to Euromonitor data, the global pet products market size was US$33.419 billion in 2017, growing to US$44.763 billion in 2021, with a compound annual growth rate of 7.58%. The global pet products market is expected to reach US$47.766 billion in 2022, and is expected to grow to US$63.401 billion in 2026.

The United States is the largest and most mature pet consumer market in the world. According to data from the American Pet Products Association (APPA), about 67% of households in the United States own at least one pet. From the perspective of product segments, U.S. veterinary care and product sales including pet supplies will total US$34.3 billion in 2021, an increase of 8.9%.

Europe is the second largest pet consumer market in the world. According to data released by FEDIAF (European Pet Food Industry Federation), the size of the European pet products market in 2021 will be 9.5 billion euros. Cats and dogs are the most popular pets, with 114 million cats and 92.9477 million dogs in Europe.

Domestically, according to data from the "2021 China Pet Industry White Paper", from 2018 to 2021, the number of people raising dogs and cats in domestic cities and towns was 56.48 million, 61.2 million, 62.94 million, and 68.44 million respectively. ; The numbers of pet dogs and cats raised by domestic urban households were 91.49 million, 99.15 million, 100.84 million, and 112.35 million respectively.

At the same time, with the increase in per capita income, pet parents have more financial ability to improve the quality of life of their pets, which will increase the demand for pet products and promote the consumption upgrade of pet products.

According to data from the National Bureau of Statistics, from 2017 to 2021, the per capita consumption expenditure of domestic residents was 18,300 yuan, 19,900 yuan, 21,600 yuan, 21,200 yuan, and 24,100 yuan respectively.

From 2017 to 2021, the average annual consumption amount of a single pet in China was 1,532.1 yuan, 1,866.9 yuan, 2,041.4 yuan, 2,047.8 yuan, and 2,216.3 yuan respectively, showing an upward trend year by year.

As a result, the domestic urban dog and cat consumer market continues to expand. According to data from the "2021 China Pet Industry White Paper", the scale of the domestic urban dog and cat consumer market from 2017 to 2021 reached 134 billion yuan, 170.8 billion yuan, 202.4 billion yuan, 206.8 billion yuan, and 249 billion yuan respectively.

Although the domestic pet market maintains rapid growth, the proportion of pet owners in the total population is far lower than that in Europe and the United States. In the future, as the proportion of domestic pet owners further increases and the per capita annual consumption of a single pet increases, the domestic pet industry will usher in sustained and rapid development.

In summary, in recent years, internationally, the pet market in developed countries has matured, and the global pet products market has grown steadily. Domestically, with the improvement of people's economic level, changes in ideological concepts, as well as the aging of the population and the growth of single and DINK groups, the size of the pet market is growing rapidly.

2

Customer resources cover the world with high quality, and overseas income has steadily increased. The domestic market has accelerated its development

The vast space of the international market and the rapid development of the domestic market have provided Tianyuan with The continued growth of the pet business provides an important development foundation.

From 2019 to 2021 and January to June 2022, Tianyuan Pet’s operating income was 1.049 billion yuan, 1.450 billion yuan, 1.854 billion yuan, and 864 million yuan respectively.

In the same period, Tianyuan Pet’s net profits attributable to its parent companies were 87 million yuan, 114 million yuan, 107 million yuan, and 48 million yuan respectively.

According to the prospectus, Tianyuan Pets is expected to achieve operating income of 1.5 billion to 1.6 billion yuan from January to September 2022, an increase of 12.46% to 19.95% from January to September 2021, and the net profit attributable to the parent is expected to be 90 million to 100 million yuan, an increase of 11.10% to 23.44% compared with the actual net profit attributable to the parent company from January to September 2021.

It is worth mentioning that Tianyuan Pets’ operating income compound growth rate in the past three years has “led” comparable companies in the same industry, highlighting its growth potential.

According to data from Oriental Fortune Choice, Tianyuan Pet’s revenue CAGR reached 32.97% from 2019 to 2021. During the same period, the revenue CAGR of Tianyuan Pet's comparable companies in the same industry, Zhongpet Co., Ltd. was 29.58%; the revenue CAGR of Petty Co., Ltd. was 12.27%; the revenue CAGR of Luce Co., Ltd. was 15.10%; and the revenue CAGR of Yiyi Co., Ltd. was 12.90%. .

Since its establishment, Tianyuan Pets has always focused on the pet industry. After long-term and extensive customer development and cooperation services, with its continuous and rich product development capabilities and efficient and reliable supply chain management system, it has gradually accumulated We have gained first-mover advantage in the industry and high-quality customer resources covering the global pet market.

Currently, Tianyuan Pet’s cooperative customers are widely distributed in major developed regions such as Europe, North America, and Oceania, including many internationally renowned large-scale comprehensive supermarket chains, professional pet product chain companies, and e-commerce companies.

In North America, Tianyuan Pet’s cooperative customers include Chewy, American Walmart, Amazon, Petco, and PET SUPPLIES PLUS; in Europe, Tianyuan Pet’s cooperative customers include Fressnapf, Birgma, Vershold, KIK, and THOMAS PHILIPPS; in Oceania Tianyuan Pet's cooperative customers include Kmart AUS, TRS, and Woolworths; in Asia, Tianyuan Pet's cooperative customers include KOHNAN, CAINZ, and Komeri; in South America, Tianyuan Pet's cooperative customers include CENCOSUD.

Among them, Tianyuan Pets has provided various categories of continuously updated pet products to major international customers such as Wal-Mart in the United States, Kmart AUS and TRS in Australia, Fressnapf in Germany, Birgma in Sweden, and KOHNAN in Japan for more than ten consecutive years.

It is worth mentioning that Tianyuan Pet’s extensive and balanced business structure not only reduces customer and market concentration risks, but also provides an important customer base and channel resources for its sustainable and healthy development. Taking 2021 as an example, Tianyuan Pets’ revenue from Europe, North America, and Oceania accounted for 19.91%, 27.13%, and 15.61% respectively.

With the overall growth trend of the global pet industry, Tianyuan Pets continues to deepen cooperation with old customers and continues to develop new overseas customers through online promotion and participation in exhibitions. In recent years, Tianyuan Pets’ overseas sales revenue has increased. Steady growth trend.

According to the prospectus, from 2019 to 2021 and from January to June 2022, Tianyuan Pet’s overseas sales revenue was 950 million yuan, 1.069 billion yuan, 1.321 billion yuan, and 572 million yuan respectively.

At the same time, Tianyuan Pets is actively exploring the domestic market based on its product development and supply capabilities in serving the international market. Facing the domestic market, Tianyuan Pet has introduced the pet food agency sales business of internationally renowned brands such as Desire, Ikena, Suligo, Mars, Nestlé, etc., using food-driven supplies to expand domestic online and offline channels, and promote pet food and pet products. Supplies are sold collaboratively.

From 2017 to 2018, Tianyuan Pets mainly sold products through offline channels such as dealers. Since 2019, Tianyuan Pets has gradually developed online and mobile Internet sales channels, and has sold products on Tmall, JD.com, Xiaomi Youpin, etc. Establish brand stores and develop pet food business within the country.

According to the prospectus, from 2019 to 2021 and from January to June 2022, Tianyuan Pet’s domestic sales revenue was 95 million yuan, 374 million yuan, 506 million yuan, and 278 million yuan respectively.

It can be seen that Tianyuan Pet’s performance has continued to rise in recent years. Its operating income has “lead” the CAGR of comparable companies in the same industry in the past three years, and its growth rate is excellent. At the same time, Tianyuan Pet’s high-quality customer resources covering the global pet market have enabled its overseas sales revenue to grow steadily and its domestic sales revenue to increase rapidly.

3

The product matrix is ​​rich and covers nine major categories, and the supply chain management system is constantly improved

After more than ten years of industry experience accumulation and entrepreneurial innovation, Tianyuan Pets has Become a comprehensive, large-scale domestic pet product supplier in all categories.

In the early days of entrepreneurship, Tianyuan Pets took the lead in entering the international pet market with pet nest mats and cat climbing frames as its main products; with the accumulation and improvement of market coverage, number of customers, team size and development capabilities, Tianyuan Pets It gradually covers multiple categories of pet products such as pet toys, pet clothing, pet daily necessities, electronic products and pet food, and continuously develops and launches a series of new products with novel styles, practical functions, safety, reliability and excellent quality.

Currently, Tianyuan Pets has achieved comprehensive coverage of nine major product categories, including nest mats, climbing frames, toys, clothing, traction, and cleaning. The basic product catalog has more than 5,000 specifications and models.

Compared with specific single-category pet product companies, Tianyuan Pet has specialization and scale advantages in the pet nest mats and cat climbing frame product segments. The annual sales of both types of products have exceeded 2 billion yuan.

Compared with other comprehensive pet products companies, Tianyuan Pets has pet nest mats and cat climbing frames as its core products. These two core products have strong necessities and high product value among various pet products. The high characteristics are an important basis for Tianyuan Pets to establish long-term one-stop purchasing relationships with customers.

From 2019 to 2021 and January to June 2022, the total sales revenue of Tianyuan Pet’s pet nest mats and cat climbing frames were 495 million yuan, 653 million yuan, 758 million yuan, and 316 million yuan respectively.

In the process of development, Tianyuan Pets continues to strengthen the construction and improvement of the supply chain management system, and gradually forms an efficient and reliable multi-category product supply chain management system, ensuring the reliability, stability, and reliability of many categories of pet products. Timely supply provides an important competitive advantage for the continued growth of its business.

First of all, Tianyuan Pet’s effective supply capability of multiple categories of pet products is outstanding. In order to avoid insufficient development, delayed supply or quality deviation of specific categories of products from affecting customers' product selection and order delivery, Tianyuan Pets has carried out efficient and tight collaborative integration of design, sales, production, quality control, logistics and other links to achieve The sharing of various information between customers and suppliers ensures that products can effectively meet customers' one-stop purchasing needs in terms of the breadth of categories and styles, and the depth of quality control and timeliness.

Secondly, Tianyuan pet supply chain management system is reliable and efficient. Except for some nest mats and climbing frames produced by its own production lines, Tianyuan Pet implements an outsourced production model for most products, and has established a supplier access and management system based on strict selection, process inspection, and continuous assessment. It ensures reliable, stable and timely supply of many categories of pet products.

Based on the domestic supply chain, in response to changes in the international environment, Tianyuan Pets has established a production subsidiary in Cambodia and will continue to promote the supply chain layout in Southeast Asia.

It can be seen that Tianyuan Pet has a rich product matrix, achieving comprehensive coverage of nine product categories including nest mats, climbing frames, toys, clothing, traction, and cleaning. At the same time, Tianyuan Pets has gradually formed an efficient and reliable multi-category product supply chain management system to meet customers' one-stop, multi-frequency purchasing needs.

4

Focus on the "four new" to achieve innovative design, launching more than 2,000 new product catalogs every year

As daily consumer goods, pets such as nest mats, climbing frames, toys, etc. Supplies need to continuously make creative innovations in terms of style, function, and materials to meet and promote the shopping needs of pet parents, the use and play of pets, and the interaction between humans and pets.

To this end, Tianyuan Pets has gradually established product development and design capabilities covering many categories of pet products, focusing on product development and design transformation from new functions, new themes, new materials, new categories, etc., which is Tianyuan Pets’ product development and design capabilities. The main components of pet’s core competitive advantages.

In terms of innovative development of new functions, Tianyuan Pets has developed and launched many electronic pet products in response to the pet owners’ needs for monitoring, observation and interaction of pets’ daily life and diet, combined with the currently relatively mature electronic technology. .

For example: automatic feeders that can be remotely controlled, induction water dispensers and induction bowls that use infrared functions to automatically switch on and off, pet luminous tags with step counting and anti-lost functions, and simulated electric toys controlled by Bluetooth, etc. Electronic pet products with automated and intelligent functions; in addition, Tianyuan Pet combines electronic products with traditional cat climbing frames, such as embedding electric toys and heating panels in the cat climbing frame, making the cat climbing frame more entertaining. with practical functions.

In terms of creative planning of new themes, Tianyuan Pets continues to develop new product styles based on customer needs, market trends, etc., while also utilizing the multi-category characteristics of pet products and combining various festival cultures. , popular elements, fashion hot spots and other design themes, we have developed and launched combination sets and series of products with the same design style and element themes, including nest mats, toys, clothing and other multi-category products.

For example: Christmas, Halloween, Valentine's Day and other holiday set products, food, interstellar roaming, tropical fantasy and other scene-themed products, as well as terrazzo, alpaca, sloth and other element-themed products.

In terms of innovative applications of new materials, Tianyuan Pets actively tries and uses new surface auxiliary materials to improve the practical performance of products in the development process of various pet products.

For example: the built-in cooling gel memory foam makes the nest cushion have a heatstroke prevention effect in summer. By adding additives or coatings to the fabric, the nest cushion is less likely to stick to hair and water and is easy to clean. By using New fiber fabrics make nest mats have better antibacterial and breathable effects, and environmentally friendly and ecological wood materials, rattan materials used in outdoor homes, etc. are applied in the development of cat climbing frames to enhance their sturdiness, beauty, and home-like characteristics.

In terms of innovative design of new categories, Tianyuan Pets addresses the pain points of usage scenarios such as limited space in some pet-raising families and the lack of unified design styles for pet products and household products, and combines the practical needs and development concepts to promote human-pet interaction. , has developed a variety of products that combine humans and pets, such as pet cabinets and pet coffee tables, and has developed traditional pet products for home use to make their craftsmanship, pattern, materials, etc. more consistent with the home environment and meet the needs of pet-raising families to save money. Consumer demands for space, multiple uses, and unified style.

After more than ten years of development and accumulation, Tianyuan Pets has gradually established a product development team that covers a wide range of categories and responds quickly to the market. As a result, Tianyuan Pets can respond quickly to customer needs and market trends, continuously develop new products for customers to choose from, and continuously update the design of original products. Tianyuan Pets launches more than 2,000 new product catalogs every year.

In addition, Tianyuan Pets pays attention to the intellectual property protection of design and development results. As of the end of 2021, Tianyuan Pets has obtained 17 software copyrights related to image software and electronic product software, 73 copyrights of related art works such as product albums, and 290 authorized patents. Among them, the patented products involve cat climbing frames, nest mats, toys, clothing, dietary supplies, daily necessities, electronic supplies and other pet products.

5

Raise 590 million yuan to strengthen the supply chain system and further enhance core competitiveness

With this listing, Tianyuan Pets plans to raise 590 million yuan to invest in " Huzhou Tianyuan Technical Transformation and Upgrading Project", "Hangzhou Hongwang Production Base Construction Project", "Tianyuan Logistics and Warehousing Center Construction Project", "Product Technology Development Center Construction Project" and "E-Commerce and Information Technology Construction Project".

The investment projects raised this time are all centered on Tianyuan Pet’s existing main business, product R&D and production process core technologies, and development plans, which will further enhance Tianyuan Pet’s core competitiveness and profitability.

The "Huzhou Tianyuan Technical Transformation and Upgrading Project" and the "Hangzhou Hongwang Production Base Construction Project" aim to solve the production capacity bottleneck problem of Tianyuan Pet's existing production base, expand the production scale, create scale effects, and then consolidate the merger and acquisition. Improve the market share of its products and the level of automation and intelligence in production.

Among them, the Huzhou Tianyuan technical transformation and upgrading project plans to technologically upgrade the existing cat climbing frame production line, which will help improve the production efficiency of Tianyuan pet cat climbing frames; the Hangzhou Hongwang production base construction project plans to build a new composite The production line of material cat climbing frames and electronic pet products will help expand the production capacity of Tianyuan pet cat climbing frames and electronic pet products.

The "Tianyuan Logistics and Warehousing Center Construction Project" aims to improve the utilization rate of Tianyuan pet storage space and improve the efficiency of material distribution and circulation. The project plans to build an intelligent warehousing system to realize automated operations from quality inspection, warehousing, inventory to delivery, which will help meet the warehousing management needs brought about by the continued growth of Tianyuan Pet’s future business and improve operational efficiency.

The "Product Technology Development Center Construction Project" aims to enhance Tianyuan Pet's customized development capabilities and cultivate R&D talents. The project plans to purchase product development equipment and software, and conduct research and development on pet nest mats, cat climbing frames, and electronic pet products. The implementation of the project will use Tianyuan Pets to improve product development capabilities and consolidate core competitiveness.

The "E-commerce and Informatization Construction Project" aims to promote Tianyuan Pets to develop sales channels, increase the proportion of online revenue, and at the same time achieve collaborative work among various departments to improve management levels. The project plans to purchase software and hardware equipment related to information systems and e-commerce operations, and introduce relevant personnel, which will help Tianyuan Pets improve operational management efficiency and develop e-commerce business.

In the future, Tianyuan Pets will seize the opportunities of continued growth in the pet industry, rely on its own strength, expand production scale, improve product line layout, comprehensively upgrade product structure, and optimize by introducing capital, technology and talents. Source of profit and improve product profitability.