Tuhu Car (9690 HK) 1H26E Preview Summary
Core Content
Tuhu Car (9690 HK) is a company in the China Auto sector, with a focus on store expansion and market share growth. The report highlights the company's performance and future outlook for the first half of 2026 (1H26E), with a continued emphasis on its strategy to expand its franchise store network and improve operational efficiency. Despite macroeconomic challenges, the company is expected to maintain a strong position in the industry due to its advantages in supply chain pricing and AI investments.
Main Points
- 1H26E Revenue Growth: Expected to increase by 11% YoY to RMB8.7bn, driven by faster-than-expected store expansion (~800 net stores added since the end of FY25).
- 1H26E Net Profit Decline: Projected to fall 48% YoY to RMB212mn (adjusted net profit) and 39% YoY to RMB187mn (IFRS net profit), due to weaker consumption and lower gross margin (23.2%).
- Operating Expenses: The combined operating expense ratio is expected to fall 1ppts YoY to 22.7%, thanks to the payoff from prior AI investments.
- Market Position: Tuhu is positioned to benefit from industry consolidation by focusing on market share gains, which should result in superior earnings elasticity once after-sales consumption recovers.
- Store Expansion Target: The new store target for FY26E is likely to rise from 1,000 to 1,600, based on increasing demand from franchisees.
- Valuation and Earnings Forecasts:
- FY26E revenue forecast is RMB18.3bn (+11% YoY).
- Adjusted net profit is revised downward to RMB496mn and RMB628mn for FY26E and FY27E respectively.
- The company's adjusted net profit margin is expected to decrease to 2.7% in FY26E and rise to 3.1% in FY27E.
- Share Repurchase Plan: Tuhu has a HK$1.5bn share repurchase plan, implying an annual share cancellation of 3% through July 2028, which could bolster investor returns.
- Dual-Listing: The company filed for a US dual-listing on 29 June, which may enhance stock liquidity and broaden investor coverage.
- Rating and Target Price: The analyst maintains a BUY rating but has trimmed the target price from HK$19.00 to HK$18.00, based on 20x adjusted FY27E P/E.
- Key Risks: Slower macroeconomic recovery, lower-than-expected revenue/margins, and sector de-rating could impact the rating and target price.
Key Financial Metrics (1H26E)
| Metric |
Forecast (RMB mn) |
YoY Growth (%) |
HoH Growth (%) |
| Revenue |
8,743 |
11.0 |
1.8 |
| Gross Profit |
2,028 |
2.3 |
2.2 |
| Operating Profit |
114 |
-48.8 |
275.5 |
| Net Profit |
187 |
-39.2 |
64.9 |
| Adjusted Net Profit |
212 |
-48.4 |
-26.9 |
| Gross Margin |
23.2% |
-2.0 ppts |
0.1 ppts |
| Operating Margin |
1.3% |
-1.5 ppts |
0.9 ppts |
| Net Margin |
2.1% |
-1.8 ppts |
0.8 ppts |
| Adjusted Net Margin |
2.4% |
-2.8 ppts |
-1.0 ppts |
Key Financial Projections (FY26E-FY28E)
| Metric |
CMBIGM Forecast (RMB mn) |
Consensus Forecast (RMB mn) |
Diff (%) |
| Revenue |
18,329 |
18,298 |
+0.2% |
| Gross Profit |
4,222 |
4,394 |
-3.9% |
| Operating Profit |
201 |
319 |
-36.9% |
| Net Profit |
357 |
467 |
-23.6% |
| Adjusted Net Profit |
496 |
738 |
-32.8% |
| Gross Margin |
23.0% |
24.0% |
-1.0 ppts |
| Operating Margin |
1.1% |
1.7% |
-0.6 ppts |
| Net Margin |
1.9% |
3.6% |
-0.6 ppts |
| Adjusted Net Margin |
2.7% |
4.0% |
-1.3 ppts |
Valuation Metrics
| Metric |
FY26E |
FY27E |
FY28E |
| P/E (Reported) |
26.8 |
24.2 |
18.7 |
| P/E (Adjusted) |
19.3 |
15.2 |
12.3 |
| P/B |
1.6 |
1.4 |
1.2 |
Analyst Ratings
- BUY: Stock with potential return of over 15% over the next 12 months.
- HOLD: Stock with potential return of +15% to -10% over the next 12 months.
- SELL: Stock with potential loss of over 10% over the next 12 months.
Key Players and Contacts
Shareholding Structure
| Shareholder |
Percentage |
| Tencent Holdings |
19.2% |
| Mr. Chen Min |
9.9% |
Stock Data
| Metric |
Value (HK$) |
| Market Cap |
11,119.0 |
| Average 3 mths t/o |
13.5 |
| 52-Week High/Low |
20.90/11.44 |
| Total Issued Shares |
828.5 |
Share Performance
| Period |
Absolute (%) |
Relative (%) |
| 1-month |
9.5 |
4.2 |
| 3-months |
-1.1 |
3.7 |
| 6-months |
-15.6 |
-11.1 |
Financial Summary Highlights
- Cash & Equivalents: Expected to grow to RMB3,970mn by FY28E.
- Total Assets: Projected to rise to RMB19,655mn by FY28E.
- Total Liabilities: Expected to increase to RMB11,878mn by FY28E.
- Net Debt to Equity: Projected to rise to 0.8x by FY28E.
- Current Ratio: Maintained at around 1.2-1.3x.
- Receivable Turnover Days: Expected to remain stable around 6.0 days.
- Inventory Turnover Days: Projected to increase slightly to 70.0 days.
- Payable Turnover Days: Expected to remain stable around 148.0 days.
Conclusion
Tuhu Car is positioned to benefit from continued store expansion and improved operational efficiency, despite a decline in profitability due to macroeconomic challenges. The company's strategy of market share gains is expected to pay off as the macro environment recovers, leading to better earnings elasticity. The BUY rating is maintained, with a revised target price of HK$18.00, reflecting a more conservative outlook due to slower-than-expected macro recovery. Key risks include slower expansion, lower-than-expected revenue/margins, and sector de-rating.
