China Securities Co., Ltd. released a research report stating that Tuhu (09690) is the leader in China's automotive after-sales service market IAM and is also an internet platform under the O2O model. The company's growth and expansion focuses on store development, steady progress, and excellent competitive structure. China's after-sales market developed earlier. Tuhu still has a large room for improvement in market share in the future. The company's future growth logic is very clear: revenue growth relies on the increase of the number of stores and the increase of future single-store revenue. The main space for store growth comes from sinking markets, and the increase in single-store revenue depends on new stores precipitating into old stores, which depends on reputation and repurchase. The improvement of gross margin depends on the increase of the proportion of proprietary brand, the optimization of revenue structure, and the continuous improvement of bargaining power. The store franchise model brings higher profit elasticity.
The bank predicts that Tuhu's revenue in 2024-2025 will be 15.567 billion yuan and 17.798 billion yuan, respectively, a year-on-year increase of 14.46% and 14.33%, of which the revenue from automotive service products will be 14.444 billion yuan and 16.522 billion yuan, respectively, a year-on-year increase of 14.21% and 14.39%. The revenue from advertising and other services will be 1.123 billion yuan and 1.276 billion yuan, respectively, a year-on-year increase of 17.69% and 13.59%. It is expected that the company's adjusted net income in 2024-2025 will be 758 million yuan and 1.266 billion yuan, respectively, a year-on-year increase of 57% and 67%. For the first coverage, a buy rating is given with a target price of HKD 25.63, corresponding to a PE of 25 times in 2024.