CICC has issued a research report stating that, taking into account the acquisition and consolidation of Hebei Kangerda, it has raised its forecast for CHEERWIN GP's 2026 net profit attributable to shareholders by 6% to RMB 250 million and introduced a forecast of RMB 270 million for 2027. The current share price implies a price-to-earnings ratio of 11 times for 2026 and 10 times for 2027. The firm maintains its Outperform rating and target price of HK$3.65, which corresponds to P/E ratios of 17 times for 2026 and 16 times for 2027, suggesting a potential upside of 59%. CICC's key views are as follows:
The company's 2025 results were in line with expectations. CHEERWIN GP reported 2025 revenue increased by 9.2% year-on-year to RMB 1.988 billion, while net profit attributable to shareholders grew 10% year-on-year to RMB 223 million, meeting the firm's projections. The total dividend payout ratio for 2025 reached 80%, and the dividend yield stood at 6.8% as of the annual report announcement date.
The pet business continued its rapid growth, while home care maintained steady expansion. A detailed look at 2025 revenue shows: 1) By category: Home care revenue increased 5% year-on-year to RMB 1.71 billion, with several core products successfully established; Pet revenue surged 74.3% year-on-year to RMB 220 million, driven by sustained fast growth in pet food, increased contribution from the Stubborn Mouth fresh food packs, and continued expansion of offline experiential formats, with the number of pet stores rising to 73 and single-store efficiency improving simultaneously; Personal care revenue declined 13.9% year-on-year to RMB 46 million. 2) By channel: Online revenue grew 30.2% year-on-year to RMB 870 million, increasing its revenue share by 7.0 percentage points to 43.9%, as the company leveraged differentiated new products to develop emerging channels such as Douyin e-commerce and instant retail; Offline revenue decreased 3.0% year-on-year to RMB 1.11 billion.
Driven by revenue mix and product differentiation, the 2025 gross margin improved by 3.5 percentage points year-on-year. CHEERWIN GP's gross margin increased by 3.5 percentage points year-on-year to 52.6% in 2025. This was due to the rapid revenue growth of the high-margin pet business, which enhanced the company's revenue structure, coupled with its focus on differentiated and premium new products. Under the product mix optimization strategy, the gross margins for the home care and pet businesses rose by 2.9 and 5.3 percentage points year-on-year to 52.1% and 60%, respectively. Improved supply chain efficiency also contributed to the margin enhancement. On the expense side, the sales and administrative expense ratios increased by 5.5 percentage points and decreased by 1.3 percentage points year-on-year in 2025, respectively, with increased online marketing driving the rise in the sales expense ratio. Overall, the net profit margin attributable to shareholders for 2025 was 11.2%, remaining largely flat compared to the previous year.
The acquisition of Hebei Kangerda strengthens the home care business advantage; focus on cash value and shareholder returns. The company announced it has completed the 100% equity acquisition of Hebei Kangerda, a leading domestic home care enterprise whose business covers daily chemical products such as insecticides and detergents. Its brand, Qiang Shou, holds a leading market share in Northern China's home care market, with 2024 revenue and net profit after tax of RMB 468 million and RMB 86 million, respectively. CICC believes that CHEERWIN GP and Hebei Kangerda possess synergistic advantages across multiple dimensions, including product innovation and R&D, supply chain management, and channel networks, which are expected to strengthen the company's home care market share in the medium to long term. Furthermore, the company currently holds ample cash reserves, with net cash of RMB 2.837 billion on its books as of the end of 2025, and has maintained a high dividend payout ratio of 80% from 2023 to 2025, demonstrating strong shareholder returns.
Risk warnings include product safety and quality issues; high reliance on a single product category; and related-party transactions.
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