CICC issued a research report predicting that the mid-year revenue of Tuhu-W (09690.HK) will increase by 10% annually to RMB 7.17 billion, and the adjusted net profit is expected to increase annually by 54% to about RMB 330 million.

The bank pointed out that the total retail sales of consumer goods in China in the first half of the year increased by 3.7% year-on-year, but the growth rate slowed down from last year. It is expected that the after-sales auto market will also be under pressure, bringing revenue pressure to Tuhu. Due to the greater pressure from the market demand decline, the corresponding profit forecast for the next two years is reduced by 22.7% and 33.6%, to RMB 663 million and RMB 1.039 billion. CICC predicts that Tuhu will open more than 400 new stores in the first half of the year and is expected to open more than 1,000 new stores throughout the year.

In mid-March, Tuhu announced that it would repurchase no more than RMB 1 billion worth of shares in the public market. As of April 22, it had used more than RMB 200 million for repurchase. In addition, the company has also improved the flexibility of its salary incentive system, and plans to issue no more than 33 million shares. CICC expects it to be conducive to business and growth prospects, maintains its 'outperform industry' rating, and lowers its target price to RMB 24.5.