Sinolink: The gold growth period overlaps with the increase in chain rate, and the opportunity for the pet hospital sector is imminent.

Sinolink released a research report stating that the market size of pet hospitals in 2024 will reach approximately 47.3 billion yuan. Factors such as the growth of pet numbers, the promotion of health care concepts, the aging and humanization trend of pets, and the increase in high-quality medical service supply are driving market expansion. It is expected that the compound annual growth rate in the next three years will reach 7%. The reasons for market expansion include: growth in pet numbers, increased frequency of visits due to improved health care concepts, increased individual spending due to aging, enhancement of willingness to pay by pet owners due to the humanization trend of pets, and increased supply of high-quality medical services through specialization in pets. The industry faces challenges such as a shortage of professional technical talent and pressure on profitability without locking in profits. Sinolink's main points are as follows: Current situation and reasons for market expansion of pet hospital industry By 2024, the market size is expected to reach approximately 47.3 billion yuan, driven by factors such as the growth of pet numbers, the promotion of health care concepts, the aging and humanization trend of pets, and the increase in high-quality medical service supply. It is expected that the compound annual growth rate in the next three years will reach approximately 7%. (1) Market size: According to the "Pet Industry White Paper", by 2024, the total industry size of pet diagnosis and physical examination will reach about 47.3 billion yuan. With the joint driving factors of pet number growth, pet visit rate and visit frequency increase, as well as the increase in per capita medical expenditure for pets, the pet medical (excluding drugs and vaccines) market size is expected to reach about 58 billion yuan by 2027, with a compound annual growth rate of about 7% in the next three years. (2) Reasons for expansion: Growth in pet numbers: Compared to mature markets in the US and Europe, there is still ample room for growth in the penetration rate of pet ownership in domestic households; the trend of multi-pet ownership is emerging, and the growth trend of pet numbers is resilient. Increase in visit frequency due to promotion of health care concepts: Compared to mature markets, there is still a significant potential for improvement in the penetration rate, visit rate, and visit frequency of pet check-ups in China; under the trends of pet humanization, younger pet owners, and higher education, there is potential for improvement in the future. Aging increases individual spending: The pet medical industry in the US and Japan has experienced a transition from "quantity over price" to "stable quantity and increasing price". With the gradual aging of the "baby boomer" generation of pets, the per capita consumption amount for individual pet cases is expected to experience a sudden increase. Strengthening of the humanization trend of pets enhances the willingness to pay by pet owners: According to data from consumer behavior surveys of pet owners in the US, the annual pet care expenditure of pet owners with characteristics of humanized pet care is about twice that of casual nurturing-type people, and their expenditure on pet medical care is more than three times that of casual nurturing-type people. With the continuous evolution of the trend of pet humanization and pet care humanization, the expenditure tendency of the new generation of pet owners on pet medical care is expected to further increase. Specialization in pets increases the supply of high-quality services: With the increasing incidence of complex diseases in elderly pets, there is an increasing demand from pet owners for accurate diagnosis. The construction of specialized veterinary services in China has been relatively short, enriching the supply of high-quality medical resources for pets. Current competitive landscape of the pet hospital industry Capital supports the expansion of leading companies, with New Ruipeng, Ruipai leading the way, and Ruichen ranking third. Compared to mature markets, the degree of chain operation in the pet hospital industry in China is relatively low, and the competitive landscape is fragmented. Chain pet diagnosis and treatment institutions account for about 21.8% in China, with ample room for improvement compared to about 36% in the US. In terms of revenue, in 2024, China's pet hospital industry had a CR2 of approximately 13.0% and a CR5 of approximately 15.5%. In terms of quantity, the CR5 of China's pet medical industry in 2024 was about 6.5%; while the CR5 of the pet medical industry in the US reached about 25%, indicating a significant room for concentration in the industry. With the listing of New Ruipeng's predecessor, Ruipeng Stock, on the New Third Board as a sign, China's pet hospital industry entered a period of capital integration in 2016. The leading companies in the industry, New Ruipeng and Ruipai, saw a rapid increase in the number of pet hospital stores. Before High Light Capital invested in Ruipeng, Ruipeng and Ruipai had a similar number of stores. After the integration of assets of 693 High Light Group and 388 Ruipeng, the gap between New Ruipeng and Ruipai gradually widened. After New Ruipeng withdrew its application for a US IPO in 2024 and strategically retracted, the number of its stores decreased from nearly 2,000 at the peak to about 1,400, while the number of Ruipai pet stores remained at around 600 from 2023 to 2025. Since 2019, primary market financing in the chain pet hospital industry has begun to focus on leading companies. Among them, Ruichen, established in 2021, has completed a Series B financing round and currently owns over 200 pet hospitals, ranking third in market share. What are the pain points in the operation of chain pet hospitals in China? (1) Shortage of professional technical talent: The shortage of pet veterinary talent in China is not only in terms of quantity but also in terms of the low educational structure of practitioners. On one hand, the average number of pets served per pet veterinarian is significantly higher than in mature markets. Additionally, about 59.71% of veterinary students come from junior colleges, with less than 30% coming from full-time undergraduate or higher education institutions. To address the shortage of veterinary talent, the industry believes that chain pet hospitals, relying on the complete tiered diagnosis and treatment system within the group, are expected to build a high barrier for talents. (2) Pressure on profitability without locking in profits: The main doubts about the future development of the pet hospital industry in the current market mainly include two points: Can the chain rate of pet hospitals continue to increase? Can the profit margin of chain pet hospitals increase? Through comparative analysis of the number one in specialized pet hospital chain rate and revenue in the American pet hospital industry, VIPPetcare and VCA, the industry believes that there is greater potential for improvement in the chain rate and profit margin of specialized pet hospital chains than in community hospitals and pet clinics. Currently, the operation of pet hospitals in China is under pressure due to: Rapid expansion leading to a significantly increased proportion of new stores in the breeding period; A high proportion of community hospital stores with low technical barriers and homogeneous competition; There is still room for improvement in operational efficiency through the empowerment of group data assets. In the future, improvement may be achieved through the closure of inefficient stores, focusing on core large store medical services, and strengthening the use of data assets to improve single-store operational efficiency. Risk warning Macroeconomic growth lower than expected, intensified market competition, risk of inability to continuously obtain financing, limited efficiency improvement in chain operation.