Summary of the report
Company overview
The online auto market is an online automotive new media platform that provides comprehensive and high-quality automotive information. The automotive information produced by its internal creative team is published on the group's own platform and on the platforms of more than 1000 business partners. High user traffic is obtained through widely distributed information, thus attracting automotive advertisers to use its advertising services.
According to the cautionary report, as of December 31, 2019, the Group ranked first among all automotive new media platforms in China in terms of daily unique visitors, with an average of about 11.2 million unique visitors per day for all distribution channels. In terms of revenue, the Group ranks fifth among all automotive new media platforms in China.
The revenue of the online car market from fiscal year 2017 to fiscal year 2019 was 118 million yuan, 158 million yuan and 178 million yuan respectively, with a compound annual growth rate of 22.9 percent. In the same period, net profits of 27 million yuan, 48 million yuan and 52 million yuan were recorded, representing a compound annual growth rate of 37.2%.
Industry status and prospects
From 2015 to 2019, online advertising spending by Chinese car advertisers increased from 10.4 billion yuan to 19.1 billion yuan, at a compound annual growth rate of 16.3 percent.
In terms of revenue, China's auto vertical media advertising market has grown from 7.2 billion yuan in 2015 to 14.5 billion yuan in 2019, with a compound annual growth rate of 18.9 percent. Driven by the growing demand for brands and promotion by automakers and dealers, China's auto vertical media advertising market is expected to continue to expand in the next five years. It will reach 21.5 billion yuan in 2024, with a compound annual growth rate of 8.2% from 2019 to 2024.
Advantages and opportunities
The strong ability to create a large amount of high-quality automobile information, for two consecutive years in 2018 and 2019, won the "most influential organization" award at the China Automobile influence Summit and Award presentation ceremony jointly organized by Baidu, Inc., Baijia and China Automotive News Network.
Professional and experienced management team
Weakness and risk
There is credit risk when the company collects accounts receivable from customers.
Advertising agents with strong bargaining power account for a large part of the investment valuation of the company's income.
Based on the IPO price (HK $1.08-HK $1.28) and the net profit of RMB 52 million for fiscal year 2019 (per HK $1.10 to Rmb1), the post-IPO market capitalization corresponds to the company's fully diluted pro forma price-to-earnings ratio of 21.3-25.2 times in 2019, similar to the valuation of industry leader Autohome Inc. Considering that the company is much smaller than Autohome Inc, taking 2019 revenue and net profit as an example, the online car market is only 2% and 2% of Autohome Inc's. Finally, the IPO was given a special rating of "5".