On February 23, Tuhu Yangche (stock code: 9690HK) issued a profit alert. According to the announcement, for the year ended December 31, 2023, the adjusted net profit of Tuhu is expected to be no less than 4500 million yuan, turning losses into profits, and achieving annual profits for the first time.
It is worth noting that in the first half of 2023, Tuhu's adjusted net profit was 21.4 billion, from which it is estimated that the adjusted net profit in the second half of 2023 will exceed 23.6 billion yuan, an increase of at least 10% compared with the first half of 2023. This means that Tuhu is not only in a state of continuous profitability, but also continues to expand its profitability and profitability.
How does Tuhu turn losses into profits? In the automotive aftermarket, where the market is fragmented, the number of SKUs is huge, and the maintenance process is complicated, a large number of companies are in a state of retreat and contractionWhere does the profit of 500 million yuan come from?
According to the information disclosed in the earnings forecast, the main reasons for the turnaround are: the further expansion of the Tuhu factory store network and the growing customer base; The improved economies of scale have enabled Tuhu to obtain better commercial terms from ** merchants, combined with changes in product and service category mix, resulting in an increase in gross profit margin; improved operational efficiency, etc.
If you carefully disassemble the logic behind this, you will find that Tuhu's profitability this time is actually the result of continuous efforts in store expansion, user operation, business management and other aspects.
First of all, from the perspective of stores, Tuhu has the largest and continuously expanding store network in China. Up to now, Tuhu has nearly 6,000 workshops across the country, covering all provinces in Chinese mainland.
As of June 30, 2023, Tuhu has more than 1,600 sinking factory stores.
Tuhu's store network is not only large and wide-ranging, but also has strong enough profitability. In March 2023, 894% of Tuhu's franchised factory stores are profitable. Because of the ability to make money, Tuhu's franchisees are very sticky. As of March 31, 2023, 399% of franchisees have opened two or more Tuhu factory stores.
Secondly, from the perspective of users, the number of users of Tuhu has grown steadily, and it has become the largest community of car owners in China. As of the first half of 2023, there are about 10.5 billion, with an average of 9.9 million monthly active users.
This is also due to a series of initiatives launched by Tuhu to ensure the user experience. In the past year, Tuhu has not only launched the first user-oriented evaluation system in the automotive service industry, "Good Word of Mouth Store", but also released four "Rest Assured Consumption" initiatives and launched the "Automotive Service Industry Code of Conduct Initiative" to promote service quality upgrades and attract more customers to repurchase.
Because of this, Tuhu's user reputation has also continued to improve. Since the launch of the "Good Reputation Store" selection campaign, the user satisfaction of Tuhu Car Workshop has increased significantly, reaching 4 by the second half of 202378 out of 5, a record high.
Driven by this, Tuhu's sales continued to climb. During the 2024 Chinese New Year Festival, the online transaction volume (GMV) of Tuhu car maintenance exceeded 2.5 billion, and the single-day transaction volume exceeded 1300 million; In the sinking cities, Tuhu's car washing and beauty business increased by nearly 70%, and the tire and maintenance business increased by nearly 40%.
Finally, from the perspective of first-class merchants, it is based on the scale advantages of stores and users, as well as the word-of-mouth advantages for franchisees and customers, that Tuhu can attract more high-quality first-class businessmen, get more advantageous procurement, and then improve profit margins.
In the past year, Tuhu has continued to deepen its cooperation with well-known brands such as Castrol, Brembo and Chevron, and as the largest tire retailer in China, it has not only established a cooperation with Michelin, a century-old tire brand, for the first time, but also launched a number of exclusive products.
With the increasing number of exclusive products from partner brands, Tuhu's profitability has also been further enhanced. From 2019 to the first quarter of 2023, the revenue contribution of the Tuhu exclusive brand increased from 175 to 365%, the revenue contribution of private label from 47 to 301%。Correspondingly, from 2019 to 2022, Tuhu's gross profit margin increased from 74% rose to 197% and 24. in the first half of 20232%, an all-time high.
Based on the above, it can be seen that Tuhu has opened up a closed loop of positive feedback between users, stores, and first-class merchants and other partners - the increase in user traffic can attract more franchisees and first-class merchants, which in turn will bring more store coverage and improve offline performance capabilities, while strengthening upstream bargaining power, improving first-class competitiveness and product quality, which will feed back user traffic and open a new round of positive cycle.
And this is also the underlying logic of Tuhu to turn losses into profits and make a profit for the whole year in 2023. In the future, it is believed that the positive value of Tuhu's business logic will continue to be amplified, resulting in stronger profitability and better market realization.