Autohome: Staying Bullish On Enticing Shareholder Yield And Regulatory Tailwinds

Core Viewpoint - Autohome Inc. maintains a Buy investment rating due to attractive shareholder yield and potential positive surprises in Q3 2024 results driven by regulatory tailwinds [1] Share Buyback Program - Autohome's board approved a new share repurchase program to buy back up to $200 million worth of shares over the next 12 months, resulting in an estimated forward buyback yield of approximately 6.2$3.2 billion in cash and investments, which is roughly equivalent to its current market capitalization of $3.21 billion, indicating sufficient capital for the buyback [2] - Current trading multiples suggest that share repurchases could be value accretive for Autohome [2] Dividend Policy - Autohome plans to distribute at least RMB1.5 billion (approximately$211 million) in dividends annually on a semi-annual basis from FY 2024 to FY 2026, translating to a 6.5% dividend yield [3] - The company's 1H 2024 normalized net profit was $147 million, indicating sufficient earnings to support the dividend payments [3] Regulatory Tailwinds - Autohome benefits from increased vehicle replacement subsidies in China, with subsidies for electric vehicles rising from RMB10,000 to RMB20,000 and for internal combustion engine vehicles from RMB7,000 to RMB15,000 [5] - The increase in subsidies is expected to boost automotive sales, as evidenced by significant sales growth reported by companies like BYD and Tesla [5] Revenue Streams - Autohome's revenue primarily comes from advertising services and lead generation services, which are likely to grow alongside increased automotive sales [5] - The company experienced a 3.4% YoY revenue growth in the first half of the year, with modest expectations for a 0.3% YoY increase in Q3 2024 [5] Market Valuation - Autohome is currently valued at depressed multiples, suggesting potential for re-rating if shareholder capital returns improve and Q3 2024 results exceed expectations [7]