Company Overview: An IAM leader in the automotive aftermarket for more than 10 years; the company has been a leading IAM leader in the automotive aftermarket for more than 10 years. Its main business includes: ① tires and chassis parts; ② car maintenance; ③ auto parts; ④ other auto parts & beauty & maintenance; with comprehensive advantages such as brand & management & capital, it creates an online and offline integrated model to build core barriers; subsequent growth relies on urban development & business structure optimization to promote rapid growth.
Industry analysis: The size of the trillion-class automobile aftermarket, the pattern is scattered and concentration continues to increase; 1) Industry size: The trillion-level market was dominated by dealers in the past (high sales-after-sales stickiness, dealers had a first-mover advantage with high standards & good service experience), and the share of third parties was low. 2) Changes in the pattern: ① The IAM share is gradually increasing: with the rise of independent brands, a large number of 4s stores are gradually leaving, and the advantages of IAM are highlighted, and the IAM share is expected to increase rapidly; ② the IAM pattern tends to be concentrated: currently IAM CR5 is only 3%. As third parties under the O2O model continue to establish brand and establish customer stickiness, it is expected that traditional third parties will gradually clear the tail end; ③ Under the trend of pattern concentration, manufacturers with the three major capabilities of brand+capital+management will be more competitive.
Overall perception: Strong comprehensive advantages in brand & management & capital, building a moat with an integrated online and offline model; Advantage ① - Brand: The company has been deeply involved in the automotive aftermarket for more than 10 years, has a rich brand heritage, and continues to consolidate its brand power by improving channel layout and expanding the new energy supply chain. Advantages ② - Management: The company has built its own warehousing, logistics & full-process digital management system. The supply chain management capability is strong, and the operating efficiency is significantly higher than that of the industry. Advantage ③ - Funding: Benefiting from Tencent's endorsement & strong bargaining power, the company has strong financial strength, which is conducive to ensuring sufficient cash flow.
Growth logic: Second-tier city development & business structure optimization, performance showing a positive upward trend; 1) Growth logic - volume: number of registered users and conversion rate of trading users are core elements. As the expansion of the company's second-tier cities accelerates and is driven by online order conversion, the increase in the number of registered users and transaction conversion rates is expected to drive the company's revenue side to continue to grow. 2) Growth logic - benefits: ① Brand & business structure optimization: With the structural improvement of the company's highly profitable business (the share of its own brand & car maintenance business continues to increase), the company's gross margin is expected to increase steadily. ② Under the scale effect & fine management, the company has achieved remarkable results in reducing costs and increasing efficiency, which is expected to further improve profitability.
Investment rating: We expect the company's revenue for 24-26 to be 15.9/18.7/22.1 billion yuan, with year-on-year growth rates of +17%/+18%, respectively; achieving net profit of 0.77/1.23/1.84 billion yuan, with year-on-year growth rates of -89%/+60%/+50%, corresponding PE of 17.5/10.9/7.3x. I am optimistic about the company's performance growth stability under the Matthew effect as a stable leader in the industry. The performance side is expected to fully benefit from third-party pattern optimization, drive resonance on the valuation side, cover for the first time, and give it a “buy” rating.
Risk warning: Internet companies' development of online and offline integrated platforms has led to increased competition in the industry. The expansion of business such as car maintenance may affect the increase in profitability. The company's stores in second-tier cities and below are not expanding as fast as expected, which may affect revenue growth. The public data used in the research report may have the risk of untimely data updates and the risk of deviations in industry size estimates.