Jinwu Financial News | CITIC Construction Investment released a research report saying that the outlook in Auto Home (02518) is under pressure, but the innovative business is showing positive performance. Affected by the decline in sales of mainstream joint venture brands, the company reported a decline in corresponding advertising revenue. Considering the continuation of the automaker price war, it is expected that the media service section will remain under pressure in the third quarter, and Q4 is expected to benefit from a recovery in sales. The outlook is under pressure, but innovative businesses are showing positive results.
According to the bank, as of the end of the second quarter of 2024, the total amount of the company's cash, cash equivalents and short-term investments was RMB 23.47 billion, and the net cash flow from operating activities in the second quarter was RMB 0.452 billion. The company will continue its shareholder return plan. It is expected that within the three years from 2024 to 2026, the total annual dividend will be no less than 1.5 billion yuan. Sufficient cash reserves and positive shareholder returns will provide solid support for the company's stock price.
The bank predicts that the company's revenue for 2024-2025 will be 7.236 billion yuan and 7.456 billion yuan, up 0.72% and 3.04% year on year, and adjusted net profit of 2.019 billion yuan and 2.143 billion yuan respectively, up -6.51% and 6.14% year on year, corresponding net profit margins of 27.90% and 28.74%. Maintaining the “buy” rating, the target price is 30.97 USD/ADS, and the target price for Hong Kong stocks is HK$60.82, corresponding to 14 times PE in 2024.
