Guoxin Securities·2025-08-27 06:08Investment Rating - The report assigns an "Outperform" rating to the company for the first time, with a target price range of HKD 98.00 to HKD 108.00, indicating a potential upside of 25% to 39% from the current price of HKD 81.25 [6][4]. Core Insights - The company is positioned to reach a profitability inflection point through its customized vehicle strategy and is expected to benefit from the Robotaxi model, which will enhance its mid-term growth prospects [3][4]. - The report highlights the company's strategic shift from a B2C model to a focus on customized vehicles and partnerships with aggregation platforms, which is anticipated to improve operational efficiency and market penetration [2][3][31]. Company Overview - The company, Cao Cao Travel, is a leading ride-hailing platform backed by Geely Group, with a market share of 5.4% and a projected total transaction volume of RMB 17 billion in 2024 [1][16]. - The company has undergone a strategic transformation since 2021, shifting its management team from traditional automotive backgrounds to professionals with experience in the ride-hailing industry [18][20]. Industry Development - The ride-hailing industry in China is experiencing stable growth, with daily orders expected to reach 31.5 million in 2024, reflecting a penetration rate increase from 10% in 2015 to 41% in 2022 [2][52]. - The industry is characterized by a few dominant players, with the top player, Didi, expected to achieve an adjusted EBITA margin of 3.0% in 2024 [2]. Financial Analysis - The company is projected to achieve revenues of RMB 20.9 billion, RMB 27.5 billion, and RMB 34.6 billion for the years 2025, 2026, and 2027, respectively, representing year-on-year growth rates of 43%, 32%, and 26% [4][5]. - The adjusted net profit is expected to improve from a loss of RMB 4.9 billion in 2025 to a profit of RMB 5.1 billion in 2027, indicating a significant turnaround in profitability [4][5]. Business Model - The company's core business is centered around ride-hailing services, which accounted for 92.6% of its revenue in 2024, with vehicle leasing and sales contributing marginally [23][24]. - The shift towards a light-asset model is expected to alleviate cost pressures and improve profitability, with a focus on customized vehicles and partnerships with local operators [29][30]. Growth Outlook - The company aims to expand its operations to 136 cities by the end of 2024, with a fleet of 34,000 customized vehicles, indicating a strong growth trajectory [16][18]. - The introduction of Robotaxi services is anticipated to further enhance the company's growth potential, with plans to launch a dedicated L4 Robotaxi model by the end of 2026 [3][4].