On February 18, CITIC ** released a research report covering Tuhu for the first time and giving it a "** rating". The target price is 28 Hong Kong dollars, corresponding to the ** price of 18 on February 2042 HKD implies 52% of the ** space.
CITIC** believes that the steady increase in the number of passenger cars in China has brought about the continuous expansion of the automotive aftermarket, which is a high-quality track for the automotive service sector. As a leading auto service provider, Tuhu is expected to benefit from the aging of vehicles and the trend of cost-effective consumption, and become a beneficiary stock in the current era of "consumption equality". CITIC** expects Tuhu to achieve revenue separately400 million yuan, a year-on-year increase of 167% and 156%。
In the trillion-dollar automotive aftermarket, Tuhu has become a beneficiary of the era of "consumption equality".
Benefiting from the steady growth of car ownership, the scale of China's automotive aftermarket continues to expand. According to CITIC** estimates, the overall size of China's automotive aftermarket will reach 142 trillion yuan, and the overall market size is expected to reach 171 trillion yuan, corresponding to a compound annual growth rate of 47%。
As a leading chain maintenance brand, Tuhu not only benefits from the steady growth of passenger car ownership, but also continues to benefit from "aging vehicles" and "consumption equality". In terms of "aging vehicles", the CITIC ** research report shows that the average age of cars in China will reach 6 in 2022In 4 years, the average age of passenger cars is expected to increase to 7 by 20259 years. As the vehicle ages and the "residual value" of the vehicle decreases, car owners are more inclined to seek lower-cost repair and maintenance services.
At the same time, affected by the economic cycle, people generally pay attention to the balance and unity between quality assurance and rationality in consumption activities, and "consumption equality" instead of "consumption upgrading" has become the latest mainstream trend. Compared with authorized 4S stores, independent maintenance stores with non-authorized systems have more advantages, but the maintenance industry pattern in the independent aftermarket is scattered, and there is a pain point of "opaque quality and first-class system" for a long time.
On this basis, the head large-scale chain aftermarket brand represented by Tuhu Yangche provides consumers with a choice of balancing "quality" and "quality". In the past ten years of operation, the chain brand represented by Tuhu has laid a relatively solid brand foundation and good reputation, and the open and transparent service system and perfect service system have given consumers the confidence and reason to choose to buy chain store services. At the same time, thanks to the economies of scale and its own chain, it has a higher degree of freedom in competition than brand authorized 4S stores, providing high-quality and low-cost options to benefit consumers to achieve a "win-win" situation.
With good business and high barriers, Tuhu has a clear route to improve the profitability of car maintenance
In the view of CITIC, Tuhu adopts the franchise model, the essence of which is to earn money from the "** chain", and the model can be analogous to the franchise model of milk tea shops, such as Mixue Bingcheng to make a profit through the difference between the purchase and sale prices of raw materials. The advantage of the franchise model is that the investment in fixed assets is light and the profit is stable, so whether from the perspective of profit or cash flow, Tuhu is "sure to make a profit and not lose money" at the store end.
Not only that, with the "strong control" of stores, the success of Tuhu car maintenance is difficult to replicate, and it has established high barriers in the automotive aftermarket. CITIC** pointed out in the research report that product self-supply + unified logistics distribution allows Tuhu to have the ability to "strong control" of stores. Taking goods as an example, more than 90% of the products sold by Tuhu franchise stores are provided by Tuhu, while the proportion of other e-commerce platforms in the industry is only about 40%.
CITIC** is optimistic about Tuhu's ability to release profits in the next two years, which is mainly due to three aspects: first, Tuhu's store expansion will bring an increase in revenue; The second is that the improvement of Tuhu's sales structure will increase profits, and as of the first half of 2023, the proportion of revenue contributed by self-owned and exclusive products with higher gross margins will be 289%za、37.4%, CITIC** expects that there will be room for continuous improvement in the future; The third is that the cost is controllable, and the scale advantage has brought about a decrease in Tuhu's overall expense ratio and a convergence of the model.
CITIC** expects that Tuhu's profit will be released quickly, and the annual net profit attributable to the parent company will be 7600 million yuan, 142.1 billion yuan, a year-on-year increase9%。
Based on this, CITIC ** gave Tuhu a "** rating.