We have fine-tuned the revenue and profit forecast for Tourover (9690 HK). We expect revenue to increase 8% year-on-year to 14.7 billion yuan (RMB, same below) in 2024, and adjusted net profit of 0.73 billion yuan, corresponding to a net interest rate of 5%. We believe that the decline in customer unit prices due to consumers' pursuit of cost performance will still put pressure on revenue growth in the short term, but the trend of increasing profit margins will not change. The company will continue to expand factory stores, optimize the product structure, increase the proportion of exclusive and self-controlled products with high profit margins (currently about 70%), and cooperate deeply with upstream to enhance the bargaining power of the supply chain. Maintain the target price of HK$24 and the buy rating.
Revenue for the first half of 2024 was 7.1 billion yuan, up 9.3% year over year. Gross margin increased 1.7 percentage points to 26% year over year, thanks to increased revenue contributions from exclusive and automated products and maintenance services with high profit margins and increased bargaining power in the supply chain. The operating rate decreased by 0.9 percentage points year on year, and adjusted net profit was 0.36 billion yuan, up 67% year on year, corresponding to a net interest rate of 5%.
Performance highlights: 1) The retail layout is progressing steadily. As of June 30, there were 6,311 Tourover factory stores, an increase of 402 compared to the end of 2023. Among the newly opened stores, middle- and low-tier cities accounted for 60% +. 2) Revenue from automotive products and services increased 10% year-on-year in the first half of the year. Revenue from tires and chassis parts was driven by the continued release of delayed demand, partly offset by lower customer unit prices, and beauty washing services contributed to revenue growth. 3) Revenue from advertising, franchise and other services increased 4% year-on-year. Increased promotion efforts by partner suppliers led to a 22% increase in advertising revenue, which was partially offset by a contraction in NEV sales revenue.
