Introduction to this report:
Tourover has significant competitive advantages in terms of scale, supply chain and operational capacity. The space for opening stores is still vast, and profitability is being optimized at an accelerated pace.
Summary:
Investment advice: The company's 2024-2026 revenue is estimated to be RMB 157.78/181.72/20.438 billion (RMB, same below), with growth rates of 16%/15%/12%, respectively; the company's adjusted net profit for 2024-2026 is estimated to be RMB 874/14.75/2.86 billion, respectively, with growth rates of 82%/69%/48%, respectively, and corresponding PE is 15/9/6x, respectively. Referring to the valuation of comparable companies in the same industry, the company was given 20xPE in 2024, which is higher than the industry average, with a target market value of HK$18.9 billion.
In the trillion-dollar automotive service market, O2O is reshaping the industry landscape. As the number of cars in stock grows and the average age of cars increases, the size of China's auto service market will exceed trillion dollars. Compared with developed overseas countries, there is still plenty of room for improvement in the number of cars owned by 1,000 people in China. Car service is a low-frequency business. Under the DIFM model, more attention is paid to offline contract fulfillment and trust relationships. In response to industry pain points such as high decentralization, information asymmetry, and inefficient contract implementation, compared with 4S and traditional IAM, the O2O model has advantages such as high pricing transparency and service standardization.
As an O2O car service leader, Tourover builds barriers in scale, supply chain, and operational capacity. Starting with an online retail platform, the company gradually established a large-scale offline store network, and cooperated directly with auto parts suppliers to efficiently provide affordable genuine products through a strong supply chain and a logistics system covering the whole country. Tourover's core competitiveness is reflected in direct supply chain procurement and strong store control. With a full technical support service system and a standardized and digital fulfillment system, it breaks information asymmetry and improves delivery efficiency and speed.
The inflection point of profit has been achieved due to the scale effect, and there is still plenty of room for the medium to long term. On the revenue side, Tourover's growth space comes from an increase in the number of stores and an increase in the number of users and repurchase rates. We estimate that in the medium term, Tourover will open 15,466 stores. On the profit side, gross margin increases as the business structure is optimized, the share of owned and exclusive brands increases, and the ability to bargain upstream due to scale effects. Expense ratios are diluted as operational efficiency increases, and profitability is expected to increase further.
Risk warning: Store opening falls short of expectations, industry competition intensifies, and new automotive technology is impacting.