Core views

In the first quarter of 2024, the company achieved revenue of 1,609 billion yuan, a year-on-year increase of 4.92%, and achieved adjusted net profit of 494 million yuan, an increase of 2.16% over the previous year, corresponding to a net interest rate of 30.7%. Both revenue and profit exceeded Bloomberg's agreed expectations. According to QuestMobile data, the average number of daily mobile users at Auto Home reached 69.39 million in March, an increase of 8.1% over the same period in 2023.

The company's revenue continued to grow steadily this quarter. Among them, the growth rate of media service revenue continued to be dragged down by the price war in the automotive industry. Online marketing and other revenue growth rates were relatively rapid. Businesses related to franchisees, data products, and new energy vehicles are expected to become new growth drivers in the future.

Furthermore, on May 11, the company announced an interim dividend totaling 500 million yuan. Considering the company's abundant net cash and sufficient shareholders' ability to return in the future, it is expected to be an important support for the company's stock price.

occurrences

In the first quarter of 2024, the company achieved revenue of 1,609 billion yuan, a year-on-year increase of 4.92%, and achieved adjusted net profit of 494 million yuan, an increase of 2.16% over the previous year, corresponding to a net interest rate of 30.7%. Both revenue and profit exceeded Bloomberg's agreed expectations. According to QuestMobile data, the average number of daily mobile users at Auto Home reached 69.39 million in March, an increase of 8.1% over the same period in 2023.

Brief review

Revenue has maintained steady growth, and revenue related to new energy sources is growing strongly. In the first quarter, the company achieved revenue of 1,609 billion yuan, up 4.92% year on year, of which lead service revenue was 726 million yuan, up 6.73% year on year, accounting for 45% of revenue. Online marketing and other revenue was 555 million yuan, up 12.96% year on year, and the revenue share increased to 35%, mainly driven by data product revenue. Among them, revenue from new energy brands increased 49.6% year over year, continuing to outperform the industry's sales growth rate. Media service revenue was 327 million yuan, down 9.42% year on year, and the share of revenue fell to 20%. Considering the continuation of the automaker price war, media service revenue is expected to remain under pressure in the second quarter, and is expected to gradually recover in the second half of the year. In the first quarter, the company cooperated with more than 30 new retail business brands, and held more than 100 offline marketing events such as new car launches, test drives, and comparison test drives. In addition, the company authorized franchisees in 8 cities in the first quarter. Franchise stores in these cities will all be launched one after another this year, which will greatly promote the expansion of the company's NEV service ecosystem to low-tier cities.

The expense ratio climbed slightly during the period, and the overall profit margin was stable. The company achieved a gross profit margin of 81.3% in the first quarter, an increase of 3.48 pcts over the previous year. In terms of the cost ratio for the period, the company's sales expense ratio increased by 5.74 pct to 39.85% year on year in the first quarter, mainly affected by last year's low base, and the month-on-month increase was not significant; the company's management expenses rate and R&D expenses ratio in the first quarter were 9.29% and 20.89%, respectively, down 0.43 pct and 0.26 pct year on year. In the first quarter, the company achieved non-GAAP net profit of 494 million yuan, an increase of 2.16% over the previous year, corresponding to a net interest rate of 30.7%. It was 31.53% in the same period last year, and the overall profit margin level was stable.

The net cash balance was abundant, and the interim dividend was paid. As of the end of the first quarter of 2024, the company's net cash value exceeded $3 billion, and an abundant net cash balance is expected to be an important support for the company's stock price. The company previously promised to pay no less than RMB 1.5 billion in cash dividends every year from 2024-2026. On May 11, Auto Home announced that the company's board of directors had approved a cash dividend of $0.5700 (or $0.1425 per common share) per ADS, with a total dividend of 500 million yuan. The stock price was adjusted after the implementation of the interim dividend.

Profit forecast and valuation: We expect the company's revenue for 2024-2025 to be 7.403 billion yuan and 7.635 billion yuan, respectively, up 3.05% and 3.12% year on year, and adjusted net profit of 2,189 billion yuan and 2.03 billion yuan respectively, up 1.38% and 5.20% year over year, corresponding to net interest rates of 29.57% and 30.17%.

Maintaining the “Buy” rating, the target price is 33.43 USD/ADS, and the target price for Hong Kong stocks is HK$61.45, which corresponds to 13 times PE in 2024.

Risk warning: Shareholder returns fall short of expectations; low expectations for domestic macroeconomic and consumer recovery; low demand for terminals in the automotive industry; intense competition in the automotive industry price war continues to drag down media service performance; online sales and marketing budget allocations for electric vehicles are more fragmented than fuel vehicles; competitive risks in the automotive information market, including platforms that understand Che Di and Easy Car squeeze the company's market share; the physical used car industry is squeezing market space, industry competition intensifies; new business development falls short of expectations; the Fed's interest rate cut process is low, dragging down the overall performance of the Chinese and US stocks; the RMB exchange rate exceeds expectations; Expected depreciation; other overseas risk factors affecting the overall performance of the Internet in Hong Kong stocks.