Jingu Financial News | Tianfeng Securities released research reports stating that Tuhu (09690) achieved rapid expansion through an integrated online and offline service model, opening over 400 new stores in 24H1, with the service network covering the whole country. Driven by technology, in 2023Q1, the daily service turnover rate per workstation reached 2.2, significantly higher than the industry average turnover rate of 1.1 at the end of 2022. Direct sourcing and proprietary brand strategy brought high turnover and high gross margin, with self-controlled product revenue accounting for 25.9% of auto product and service revenue in 2023, and a gross margin of 25.9% in 2024H1. Standardized services led to high repurchase rates, significant user growth, monthly user numbers increasing by over 40% year-on-year, reaching 0.126 billion registered users, 21.4 million trading users, achieving 18.8% growth during the same period.
The bank continues to point out that Tuhu Car Care demonstrates strong growth momentum in the competition with internet giants, leading the industry with over 6,300 stores and 126 million registered users. The company has rapidly expanded through a light asset model, especially achieving significant results in lower-tier markets. The coverage rate of passenger vehicle ownership in areas with over 20,000 vehicles has reached nearly 65%. By early layout in the mobile internet sector and cooperation with Tencent, the company has built a strong user traffic pool, leveraging advantages in scale and traffic through new channels like TikTok and livestreaming e-commerce. Additionally, Tuhu excels in the new energy service sector, with a user penetration rate increasing to 8.4%, ranking first in the industry in terms of new energy users. In the first half of 2024, Tuhu Factory Store applications surged across the board, increasing by 22% year-on-year, particularly in lower-tier markets. Intentions to open stores in the northeast and northwest regions were 2.5 times higher compared to the same period last year, with 402 new stores opened in 24H1, franchisee profit margins reaching as high as 90%, with franchisees' profits becoming a secondary driver of Tuhu's growth.
The bank believes that the post-vehicle service market space is vast, Tuhu's rapid growth momentum in lower-tier markets is strong, revenue is expected to continue to expand with the increase in the number of stores, improved store reach for enhanced services, strengthening of repurchases, forming front-end price advantages through procurement negotiations, continuous improvement in product structure, gradual increase in the proportion of self-owned products, expected to bring a 1-2 percentage point increase in gross margin annually. Establishing a comprehensive brand competitive advantage with scale, products, and services. It is projected that Tuhu's revenue for 2024-2026 will be 14.6 billion / 16 billion / 17.6 billion RMB yuan respectively, with adjusted net income of 0.733 billion yuan / 1.139 billion yuan / 1.53 billion yuan, corresponding to PEs of 22/14/10 times. Using the leading US post-vehicle service company as a comparable company, the industry's average PE in 2025 was 18 times, giving Tuhu a target PE of 18 times in 2025, corresponding to a target market capitalization of 22.4 billion Hong Kong dollars and a target price of 27.59 Hong Kong dollars. First coverage, with a "buy" rating.
