Investment Rating - Buy rating (first coverage) [1] Core Views - The company is a leading online-to-offline (O2O) automotive service platform in China, addressing key pain points in the automotive service industry [2] - The company operates a well-managed offline network of stores and technicians, providing high-quality and standardized in-store services [2] - The company has built a comprehensive automotive service platform that includes car owners, suppliers, service stores, and other participants [2] - As of the end of 2023, the company has 5,909 Tuhu Workshop stores nationwide, with 5,757 being franchised stores, covering all provincial-level administrative regions and over 300 cities [2] - The company has 115 million registered users, with over 19.3 million users placing orders on the platform in 2023, and an average of over 10 million monthly active users on the Tuhu Car Maintenance app [2] - The company's proprietary technology system supports digitalization of the supply chain and is coordinated through intelligent algorithms [2] - The company has over 800 R&D personnel and has developed a comprehensive automotive service technology support system [2] Business Model and Expansion - The company's asset-light business model enables rapid expansion, with a self-developed online platform supporting stable business operations [2] - The company's innovative franchise model allows for rapid expansion of its store network while ensuring service standardization and product quality [2] - As of March 31, 2023, the company has established the largest and most accurate automotive parts database in China, covering 286 brands and over 66,000 vehicle models, with a matching accuracy rate of 99.99% [2] - The company has strong bargaining power with upstream suppliers and high customer loyalty, with a repurchase rate of over 60% [2] Market Potential - The automotive aftermarket in China is a long-term growth opportunity, with the market size reaching RMB 1.2 trillion in 2022 [2] - The market is expected to grow at a CAGR of 9% from 2023 to 2027, driven by increasing car ownership, mileage, and vehicle age [2] - The market is highly fragmented, with traditional IAM stores expected to increase their share from 46.6% in 2022 to 58.1% in 2027 [2] - The company's new business model addresses the inefficiencies of traditional IAM stores, such as poor user experience, complex supply chain layers, and inefficient fulfillment processes [2] Financial Performance and Valuation - The company achieved a turnaround in 2023, with revenue of RMB 13.6 billion, a YoY increase of 17.8%, and net profit of RMB 670.3 million [19] - The company's gross margin increased from 19.7% in 2022 to 24.7% in 2023, driven by the growth of self-owned and exclusive brands [4] - The company's net profit margin also improved, with adjusted net profit (non-IFRS) reaching RMB 481 million in 2023 [19] - The company's revenue structure has been optimized, with high-margin businesses such as car maintenance increasing their share [20] - The company's gross margin is expected to continue to rise, with forecasts of 26.0%, 26.7%, and 27.4% for 2024, 2025, and 2026, respectively [4] - The company's net profit is expected to reach RMB 671.1 million, RMB 1.114 billion, and RMB 1.547 billion in 2024, 2025, and 2026, respectively [4] - The company's 2025 PE ratio is 12X, compared to the average PE ratio of 21X for comparable companies, indicating significant upside potential [5] Industry Comparison - The US automotive aftermarket has seen strong performance from companies like AutoZone and O'Reilly, with AutoZone's revenue growing from USD 5.71 billion in 2005 to USD 17.46 billion in 2023, a CAGR of 6.4% [2] - AutoZone's net profit grew from USD 571 million in 2005 to USD 2.53 billion in 2023, a CAGR of 8.6% [2] - AutoZone's stock price has increased over 97 times since 2000, with an average PE (TTM) of 15.6X [2] - O'Reilly's revenue grew from USD 2.045 billion in 2005 to USD 15.812 billion in 2023, a CAGR of 12%, with net profit growing from USD 164 million to USD 2.347 billion, a CAGR of 15.9% [2] - O'Reilly's stock price has also increased over 97 times since 2000, with an average PE (TTM) of 21.9X [2] Key Assumptions - The company is expected to maintain an annual franchise store expansion of 1,000-1,200 stores, with franchise store numbers reaching 6,757, 7,957, and 9,157 in 2024, 2025, and 2026, respectively [6] - Single-store revenue is expected to be RMB 1.9 million, RMB 1.875 million, and RMB 1.85 million in 2024, 2025, and 2026, respectively, as the company expands into lower-tier cities [6] - Gross margin is expected to increase to 27%, 27.5%, and 28% in 2024, 2025, and 2026, respectively, driven by the growth of self-owned and exclusive brands [6] Investment Logic - Store expansion is the main driver of revenue growth, while the increase in self-owned and exclusive brands supports gross margin improvement [7] - The franchise model ensures low capital expenditure, and the company's market share in China is still far below that of AutoZone and O'Reilly in the US, indicating significant room for growth [7] - The company's gross margin is still lower than that of overseas leaders (over 50%), suggesting further upside potential [7]
轻资本快速扩张，汽车后市场真正的价值创造者