Growth slows down quarter by quarter—can Zhongchong still realize its “brand dream”?

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The pet economy, as an important direction in the new consumer sector, has always carried high market growth expectations.

However, as the "pet food leader," Zhongchong Co., Ltd.'s latest third-quarter report seems to have fallen short of these expectations.

In the first three quarters of 2025, Zhongchong Co., Ltd. achieved a total operating income of 3.86 billion yuan, a year-on-year increase of 21%.

Looking at the third quarter alone, Zhongchong Co., Ltd.'s revenue was 1.43 billion yuan, a year-on-year increase of 15.9%, which shows a significant slowdown compared to the nearly 25% growth rate in the first two quarters.

On the day after the financial report was released, Zhongchong Co., Ltd.'s stock price fell by nearly 6%.

With the increase in pet ownership penetration domestically, the pet food industry is showing a clear trend toward domestic substitution.

This presents development opportunities for traditional OEM giants such as Zhongchong Co., Ltd.

Zhongchong Co., Ltd. has built a multi-brand matrix with "Wanpy," "Zeal," and "Toptrees" as the core brands, and has set a target compound annual growth rate of 27% for domestic sales over the next three years.

Chen Shuhui, an analyst at China Merchants Securities, estimates that in the third quarter of 2025, the company's domestic self-owned brand revenue will still maintain a high growth rate of 35%-40%.

The construction of self-owned brands does not happen overnight.

In 2024, Zhongchong Co., Ltd.'s investment in business promotion and sales services reached 380 million yuan.

In the first half of 2025, core brand WANPY signed artist Ouyang Nana as the brand ambassador, boosting publicity and sales service expenses to 220 million yuan, thus raising the sales expense ratio.

With the gradual diminishing of traffic dividends, the return efficiency of marketing investments is generally facing challenges.

But for Zhongchong Co., Ltd., this is still a critical period to compete for market share and user mindshare.

Due to its high purchase frequency, wide penetration, and strong user stickiness, the pet staple food market is widely believed to have the potential to develop into a highly concentrated market.

Lei Yi, an analyst at Huayuan Securities, believes that compared with brands relying on OEM factories, Zhongchong Co., Ltd., by virtue of its self-owned production capacity, can retain higher gross profits internally, thus gaining more initiative and financial flexibility amid industry competition that requires high-intensity marketing investment.

In the first three quarters of 2025, Zhongchong Co., Ltd.'s gross margin increased by nearly 3 percentage points year-on-year, reaching 30.54%.

However, the growth rate of its expenses was on par with this.

In addition to increased sales expenses due to self-owned brand promotion both domestically and abroad, amortization of employee stock ownership plans and increases in staff compensation caused management expenses to rise by nearly 60% year-on-year.

Coupled with the base effect from high investment income in the same period last year, Zhongchong achieved a net profit of 330 million yuan in the first three quarters, with a net profit margin dropping 0.16 percentage points to 9.32%.

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