Core Viewpoint - The case regarding Tuhu's lawsuit against JD's "Zhenhu Price" has seen new developments, with JD ceasing the use of the term and launching a significant subsidy campaign [1][4][5]. Group 1: Legal Developments - JD's car service has stopped using the term "Zhenhu Price" following a lawsuit from Tuhu, which claimed unfair competition [1][3]. - The Shanghai Intellectual Property Court ruled that JD's actions related to the "Zhenhu Price" constituted unfair competition [3][4]. Group 2: Marketing and Promotions - JD announced a 5 billion yuan subsidy campaign, offering substantial discounts on services such as tire purchases and maintenance [1][4]. - The promotional activities include a "365 Wuyou Purchase" service and a naming contest for a new marketing term, with participants eligible for prizes [1][5]. - Discounts include 250 yuan off for every 500 yuan spent on tires and 200 yuan off for maintenance services over 399 yuan, with offers valid for up to a year [4]. Group 3: Industry Context - The "Zhenhu Price" initiative was launched in September 2023, aimed at addressing issues in the automotive aftermarket, such as price transparency and service standards [5]. - Following the introduction of "Zhenhu Price," Tuhu quickly responded with its own promotional activities, indicating competitive pressure in the market [4].

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **China Internet** sector, specifically the **auto classified platforms** Tuhu Car and Autohome, highlighting their performance and market dynamics in the automotive aftermarket. Company Insights Tuhu Car (9690.HK) - **Market Position**: Tuhu Car is recognized as the largest independent automotive aftermarket provider in China, with a significant lead in the market as of 1H25 [4][50]. - **User Growth**: Tuhu Car's monthly active users (MAUs) grew by **19% year-over-year (yoy)** in 2Q25, reaching **15.4 million**, outperforming competitors like JD and Tmall [4][14]. - **Revenue Growth**: Expected revenue growth of **11% yoy** in 1H25, driven by increased order volume and positive same-store sales growth (SSSG) [4][24]. - **Profitability**: Projected **21% yoy net profit growth** in 2025, attributed to eased pricing pressure and operational efficiency gains from AI [4][24]. - **Offline Expansion**: Tuhu plans to expand its workshop count by **15% yoy**, reaching approximately **7,278 workshops** by June 2025 [4][16]. - **Target Price**: The target price for Tuhu Car is revised to **HK$21.9**, reflecting a **10% implied upside** [25][51]. Autohome (ATHM/2518.HK) - **Revenue Outlook**: Autohome is expected to see a **7% yoy decline** in revenue for 2Q25, with media and lead generation revenues shrinking by **26% and 10% yoy**, respectively [30][31]. - **Emerging Revenue Driver**: Autohome Space is identified as a new revenue driver, with projected revenue growth of **2.2x yoy** in 2025, contributing **11%** to total revenue [30][32]. - **Dividend Concerns**: The company has not announced an interim cash dividend for 2025, which may indicate a delay in dividend payouts due to pending regulatory approvals for a change in controlling shareholder [30][35]. - **Target Price**: The target price remains at **US$26/HK$51**, with a neutral rating reflecting a balanced risk-reward outlook [34][49]. Key Market Dynamics - **Industry Challenges**: Autohome faces headwinds from reduced OEM marketing budgets and competition from pan-internet platforms, impacting its media services revenue [30][31]. - **Market Consolidation**: The number of registered auto repair stores has significantly decreased, indicating ongoing consolidation in the industry [21]. - **Consumer Trends**: The automotive aftermarket is experiencing shifts in consumer demand, with a focus on digital solutions and operational efficiency [50]. Financial Metrics - **Tuhu Car Financials**: For 1H25, Tuhu Car is projected to achieve revenues of **Rmb7.9 billion** and an adjusted net profit of **Rmb341 million**, with a net profit margin of **4.3%** [24][27]. - **Autohome Financials**: Autohome's expected revenue for 2Q25 is **Rmb1.75 billion**, with a non-GAAP net profit of **Rmb465 million** and a net profit margin of **26.6%** [30][45]. Conclusion - Tuhu Car is positioned for strong growth and market consolidation, while Autohome faces challenges but has potential growth avenues through its new service offerings. Both companies reflect the evolving landscape of the automotive aftermarket in China, with varying prospects for investors.

Financial Data and Key Metrics Changes - Sales decreased by 4.9% to $295 million in the fourth quarter, primarily due to six fewer selling days compared to the previous year, resulting in a sales decrease of $18.9 million [22] - Comparable store sales increased by 2.8% but decreased by 3.6% when unadjusted for days [22] - Net loss was $21.3 million compared to net income of $3.7 million in the same period last year, with diluted loss per share at $0.72 compared to diluted earnings per share of $0.12 [25][26] Business Line Data and Key Metrics Changes - Tire units were up mid-single digits in the fourth quarter, driven by growth in units above 10% during March [22] - Gross margin decreased by 250 basis points compared to the prior year, primarily due to higher material costs and increased technician labor costs [23] Market Data and Key Metrics Changes - The average vehicle life of cars on the road is over 12.5 years, with vehicle miles traveled returning to pre-COVID levels [9] - The company gained tire market share in higher margin tiers during the quarter [22] Company Strategy and Development Direction - The company plans to close 145 underperforming stores, which generated approximately 5% of total sales in fiscal 2025, to improve profitability [11] - Focus areas for improvement include enhancing customer experience, driving profitable customer acquisition, and increasing merchandising productivity [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute the performance improvement plan and capitalize on positive industry trends [19] - The company does not expect immediate improvements but anticipates enhanced profitability and increased operating income during fiscal 2026 [19] Other Important Information - The company generated $132 million in cash from operations during fiscal 2025, with a strong financial position maintained [27] - The company expects to incur store closure costs of approximately $10 million to $15 million primarily during the first quarter of fiscal 2026 [29] Q&A Session Summary Question: Can you provide details on the gross margins and the impact of self-funded promotions? - The gross margin impact related to self-funded promotions includes tire promotions and everyday offers, with expectations for continued pressure on gross margins due to baseline cost increases and potential tariff impacts [36][37] Question: What is the strategy for customer acquisition and improving the Monro experience? - The company is reallocating marketing investments towards targeting repeat customers who appreciate a range of services, with a focus on understanding customer needs [38][39] Question: Can you break down the decline in gross margin in more detail? - The decline was primarily due to 160 basis points related to material costs and 80 basis points from technician labor costs, with some deleverage on fixed occupancy costs [46][47] Question: What are the dynamics between traffic and ticket for the quarter? - Store traffic was down low single digits while ticket was up mid-single digits, with positive trends observed in March and April [50] Question: What is the common denominator for the store closures? - The closures are spaced throughout the network, focusing on stores that are unlikely to produce the desired earnings profile [56][57] Question: What factors contributed to the recent improvement in performance? - The economic environment is favorable for automotive aftermarket services, with expectations for continued demand despite potential economic slowdowns [58][59]