Investment Rating - The report gives a "Recommend" rating for Tuhu-W (09690 HK) with a target price of HKD 28 [1][9] Core Views - Tuhu is a leading internet-based auto service company in China with nearly 6000 stores (152 self-operated and 5757 franchised) as of 2023, ranking first in store count among all auto service providers in China [1] - The company achieved revenue of RMB 13 6 billion in 2023, ranking first in IAM store auto service revenue in 2022 [1] - Tuhu's main revenue comes from tires and chassis parts (40%) and car maintenance (36%) [1] - The Chinese auto service market exceeded RMB 1 2 trillion in 2022, with a 10% CAGR from 2018 to 2022 [2] - Tuhu has three competitive advantages in "goods, stores, and people": - Goods: High gross margin potential from self-controlled products (currently 26%, could reach over 50%) [2] - Stores: Strong store expansion capability with 93% profitable stores and 6-month ramp-up period for franchised stores [2] - People: Low user penetration rate (24%) but high retention rate (57% repurchase rate in Q1 2023) [2] Company Overview - Tuhu was founded in 2011 and has grown to become China's leading independent auto service brand with 5909 Tuhu Workshop stores and 19000 partner stores as of Q1 2023 [13] - The company has 115 million registered users and 19 3 million transacting users in 2023, with 10 2 million MAU in Q1 2023 [13] - Tuhu achieved revenue of RMB 13 6 billion in 2023, with gross profit of RMB 3 36 billion and gross margin of 24 7% [14] Industry Analysis - China's auto service market reached RMB 12 398 billion in 2022 and is expected to grow at a 9 0% CAGR to RMB 19 319 billion by 2027 [23] - Key demand drivers include car ownership, average vehicle age, and per-vehicle maintenance spending [23] - China's passenger car ownership reached 270 million in 2022, with per 1000 people ownership of 194, much lower than developed countries [25] - The average vehicle age in China is 6 2 years (2022), significantly lower than the US (12 2 years) and EU (12 3 years) [28] - NEV penetration in China reached 4 6% in 2022 and is expected to reach 20 5% by 2027 [26] Competitive Advantages - Tuhu has three main competitive advantages: 1) Product advantage: Potential for gross margin improvement through self-controlled products [2] 2) Store advantage: Strong store expansion capability with high standardization and profitability [2] 3) User advantage: Low penetration but high retention rate [2] - The company has built a comprehensive supply chain infrastructure with 34 regional warehouses and 511 front warehouses as of 2023 [54] - Tuhu's franchised stores have a 6-month ramp-up period and 93% profitability rate for stores open over 6 months [54] Financial Projections - Revenue is expected to grow from RMB 13 6 billion in 2023 to RMB 19 2 billion in 2026 [3] - Net profit is projected to increase from RMB 670 million in 2023 to RMB 1 47 billion in 2026 [3] - The company is expected to achieve adjusted net profit of RMB 884 million in 2024, RMB 1 28 billion in 2025, and RMB 1 67 billion in 2026 [9] Valuation - Based on a 30x PE multiple for 2024 earnings, the target market cap is HKD 22 6 billion, implying a target price of HKD 28 [9] - The valuation is supported by Tuhu's strong growth potential and profitability improvement during its rapid store expansion phase [9]
途虎-W：深度研究报告：汽车后市场龙头公司，规模效应驱动盈利能力持续提升