20240318-招银国际-途虎-W-09690.HK-Solid_FY23_with_better_profitability_8页_1mb

Tuhu Car (9690 HK) reported solid financial performance in FY23 with revenue growing 17.8% year-on-year and adjusted net profit reaching 481 million Hong Kong dollars, exceeding consensus estimates. This improvement was driven by a shift in revenue mix towards high-margin auto maintenance and private label products, leading to a gross profit margin of 24.7%, up from previous levels. For FY24, analysts maintain a positive outlook with revenue expected to grow 16% YoY, supported by workshop expansion into lower-tier cities, product diversification, and technology enhancements. Key growth drivers include increased private label offerings and operational leverage, but risks such as intense competition may limit long-term margin expansion. Valuation was adjusted to a target price of HK$35.3 based on DCF analysis, reflecting optimistic earnings forecasts but caution on potential margin pressures. CMBIGM retains a BUY rating, suggesting potential returns over 15% in 12 months, with risks including macroeconomic uncertainties, customer retention issues, and changing market needs.