This report is read as follows:
The outbreak of the company's second-hand car business contributed to a high performance. The adjusted net profit of 2022H is 330 million, an increase of 358% over the same period last year. The company has unique advantages in offline service team and risk control ability, and the development prospect of used car credit business is promising.
Summary:
Comment
Maintain the company's "overweight" rating and maintain the target price of HK $1.82, corresponding to 0.67xP/B in 2022. The company's profitability increased significantly in the first half of 2022. The operating income was 2.452 billion yuan (RMB, the same below), an increase of 73% over the same period last year, and an adjusted net profit of 330 million, an increase of 358% over the same period last year. Maintain the company's target price of HK $1.82, corresponding to 0.67xP/B in 2022, and maintain the company's "overweight" rating.
The company promotes the second-hand car credit business and promotes the high performance growth. In the first half of 2022, the company's loan contributed to service income of 1.518 billion yuan, an increase of 126% over the same period last year, which is the main driving force of performance growth. The increase in service revenue contributed by loans is mainly due to the increase in total transaction volume and the increase in the number of used car financing transactions with higher profits in the total number of auto financing transactions. There were 228000 transactions in 2022H, an increase of 26% over the same period last year, of which used cars accounted for 56%, up 24pct from the same period last year; the trading volume of used cars reached 150000, an increase of 102% over the same period last year; and financing for used cars was 14.1 billion yuan, an increase of 170% over the same period last year. The customers in the used car credit market are more sinking, the risk control ability is higher, and there are fewer competitors, so the front-end pricing of the business is higher, and when the cost of capital is close, the profit of used cars is higher. The rapid growth of the used car business with higher profits has become the main reason for the high performance of the company.
The company has a wide range of offline service personnel and excellent risk control ability, and has a bright future in the second-hand car credit market in the future. At present, the company has 4000 + ground service personnel to serve more than 36000 stores across the country, and the professional second-hand car ground service team covers more than 20,000 car dealers across the country, greatly expanding the range of customers that the company can reach. In terms of risk control, the company strengthens risk control management in the whole life cycle (before, during and after the loan), using "multi-level funnel" + "robot matrix" to achieve accurate risk control. The credit evaluation link focuses on consumers' ability and willingness to fulfill their financial responsibilities, and develops a data-driven credit evaluation system. And through a sound information technology infrastructure to achieve effective customer selection and risk control. The wide spread of offline service personnel and excellent risk control ability make the company highly competitive in the second-hand car market.
Catalyst: the auto finance market is growing rapidly.
Risk hint: the company's second-hand car financial business is not as expected; the epidemic repeatedly caused an increase in overdue rate.
