20171220-招商证券_香港_-易鑫集团-02858.HK-An_emerging_China_online_automobile_ecosystem_50页_2mb

Yixin Group (2858 HK) Summary

Core Content

Yixin Group is identified as China's leading online automobile transaction platform, with a significant market share in both transaction volume and value. It operates within a robust ecosystem, leveraging partnerships with major internet companies such as Tencent, JD, Baidu, and Bitauto to enhance its capabilities in risk management, data analytics, and consumer engagement. The company has established a comprehensive platform that connects consumers, dealers, and financial and after-sales service providers across the entire automobile value chain.

Main Points

• Market Position: Yixin holds 18.7% market share in terms of transaction volume and 18.4% in terms of transaction value in 2016, according to Frost & Sullivan.
• Growth Projections: The company is expected to achieve an 83% revenue CAGR and 182% net profit CAGR from FY16 to FY19E, driven by growth in auto transaction, finance, and aftermarket services.
• Monetization Roadmap: Yixin has evolved from a platform offering advertising and subscription services to a self-operated financing business, and further into a transaction facilitation and one-stop solution provider.
• Omni-channel Network: It has an extensive network of 15,000+ dealers, 220+ finance partners, and 5 million consumer accounts, supporting a closed-loop transaction cycle.
• Strategic Expansion: Yixin is expanding into value-added services such as insurance and auto parts repair, and is positioned to evolve into a data-driven automobile ecosystem.
• Valuation: The report initiates with a BUY rating and sets a Target Price (TP) of HK$8.8, implying a 45% upside from the current price. The TP is based on a 1.4x FY17E PEG and 70% FY17-19E EPS CAGR, aligning with its peers in the Chinese internet auto sector.
• Key Risks: Credit risk in self-operated financing business and potential inadequacy in credit loss provisions are highlighted as key risks.

Financial Highlights

Key Information

• Business Model: Yixin provides a one-stop solution for consumers throughout the automobile transaction cycle, including pre-sale, purchase, and post-sale services.
• Monetization Segments:
  • Transaction Platform: Advertising, subscription services, and loan/transaction facilitation, expected to grow at 180% revenue CAGR during FY16-19E.
  • Self-operated Financing: Financing and operating lease services, expected to grow at 52% revenue CAGR, with financing lease accounting for the majority of the revenue.
• Funding Sources: Diversified funding channels include preferred shares from major internet companies, credit facilities from banks, and asset-backed securities (ABSs), which are crucial for liquidity and expansion.
• Technology and Data Analytics: Yixin uses proprietary data analytics and big data from its partners to improve credit assessment and asset management, enhancing efficiency and reducing processing time.
• User Engagement: Yixin's omni-channel strategy includes mobile apps, websites, and offline experience stores, which help in traffic acquisition and user experience enhancement.
• Strategic Value-Added Services: Yixin is expanding into insurance, auto parts, and telematics, leveraging its extensive consumer and vehicle data to optimize product offerings and create cross-selling opportunities.

Conclusion

Yixin Group is well-positioned to capitalize on the fast-growing online automobile transaction market in China. Its strong execution and monetization capabilities, combined with a diversified funding model and robust risk management, support its aggressive growth trajectory. The report suggests a BUY rating and a Target Price (TP) of HK$8.8, indicating a 45% upside potential. The company's future growth is anticipated to be driven by its expanding ecosystem, data analytics, and strategic diversification into financial and after-sales services.