[Core Conclusion] We estimate that the company's revenue for 2024-26 will be RMB 159.1/18.58/ RMB 21.19 billion, respectively, and the company's net profit for 2024-26 will be RMB 80/14.8/2.32 billion yuan. The company's current price is 18.8/10.1/6.5 times PE. First coverage, giving a “buy” rating.
[Report Highlights] We believe that the current company has begun to make profits and its cash flow has been corrected as early as 21. Its unique Internet+ business model has been verified and implemented. As the company's number of stores increases, the share of its own brands increases, and its operating capacity and efficiency continue to improve, and it is expected to continue to grow.
The main logic #1 The post-automobile trillion market pattern is scattered, and online and offline integrated chain store cards are at the core of the ecosystem. According to Tourover's prospectus, China's auto service market surpassed 120 billion yuan in '22, and the CAGR is expected to reach 9% in 23-27; according to Roland Berger, chain stores only account for 4% of China's post-independence market stores in '21. According to Deloitte, the US accounts for nearly 60% of the post-independence market channels, while China's share is about 35%. In '22, the average age of Chinese cars was 6.2 years, reaching a critical point of switching to a more cost-effective post-independence market. We believe that a large-scale online and offline integrated store chain like Tourover, which has strong control over stores, integrates the supply chain, and grasps consumer data, will have great influence in the industry.
Main logic #2 As the proportion of exclusive and private brand supply increases, the company's gross margin is expected to continue to rise. According to the prospectus, the company expects the share of revenue from the company's exclusive and private brands to continue to increase, which will promote a continuous increase in gross margin. Comparable American companies Autozone/O'Reilly/Genuine Parts had 23 gross margins of 52.0%/51.3%/35.9%, respectively.
Main logic #3 The market value of comparable US companies exceeds 100 billion yuan. I am optimistic that Tourover will grow into an auto parts giant in the medium to long term. Comparable American stocks, the comparable companies AutoZone/O'Reilly/Genuine Parts are all 20-30 year long bulls, with a current market capitalization of US$517/644/22.6 billion (as of 2024/4/21).
We believe that both China and the US have the characteristics of a large area and many automobile and parts brands. As the Chinese aftermarket matures, Tourover is expected to grow into an automotive aftermarket giant similar to comparable companies.
Risk warning: The automotive service market is highly fragmented and highly competitive; risk of losing franchisees or cooperative store operators; risk of new energy business development; risk of regulatory risk; risk of automotive technology advancement.