20231031-招银国际-途虎-W-09690.HK-A_one-stop_auto_service_ecosystem_43页_2mb

Tuhu Car (9690 HK) Investment Report Summary

Executive Summary

CMB International initiated a "BUY" recommendation for Tuhu Car (9690 HK) with a target price of HK$50.1 (up 41.5% from the current price of HK$35.4), based on a DCF valuation yielding 2.8x FY24E price-to-sales (P/S) ratio. Tuhu, a leading O2O auto service platform in China, is poised for resilient growth driven by its large store network, franchise-friendly model, and expansion into lower-tier cities. Key revenue growth is expected at 20% CAGR from FY23-25E, supported by auto maintenance and diversification into new energy vehicles (NEV). Margin expansion is anticipated due to higher gross profit margin (GPM) from private label products and operational efficiencies. Peer comparison and SOTP valuation also support the price target.

Key Highlights

• Recommendation: BUY with target price HK$50.1.
• Growth: Revenue projected at 20% CAGR in FY23-25E, fueled by store expansion and auto maintenance services.
• Profitability: GPM expected to rise to 26.7% in FY25E, contributing to adj. net profit breakeven in FY23E.
• Market: Large Chinese automotive service market (RMB1.2tn in 2022, growing at 9.3% CAGR), with opportunities in NEV services.
• Key Risks: Competition from authorized dealers and new entrants, regulatory changes, and economic disruptions.

Company Overview

Tuhu is China's largest automotive service provider by store count, operating a one-stop, digitalized ecosystem with 24,394 service stores as of Q1-2023. Its franchise model (88% of stores) enables scalable expansion, supported by strong supplier partnerships and a trusted brand with high customer loyalty (repeat purchase ratio of 62.3% in 2023).

Financial Analysis

• Revenue: FY23-25E revenue is forecasted at 20% CAGR, with auto maintenance contributing ~41% in FY25E. Margin improvement driven by private label products, higher GPM (22%-26.7%) and opex reduction.
• Profitability: Expected to achieve adj. NP breakeven in FY23E and positive net profit in FY24E/FY25E.
• Balance Sheet: Strong cash position (RMB3.31bn in FY24E), supporting CAPEX growth.

Valuation

• DCF Model: Target price HK$50.1, implying 2.8x FY24E P/S.
• SOTP and Peers: Comparable multiples support the valuation; global peers average around 2.6x P/S.

Investment Risks

• Competitive pressures from authorized dealers and e-commerce players.
• Technological risks, including impact from NEV adoption and autonomous driving.
• Regulatory and compliance risks in data privacy and franchising.
• Potential economic disruptions affecting mobility and consumer spending.

Conclusion

Tuhu Car is positioned to capture significant growth in China's expanding automotive service market through its scalable business model and diverse monetization strategies. The BUY recommendation reflects upside from margin expansion and recovery post-COVID, with the target price validated by multiple valuation methods.