We expect 24H1 Tourover revenue of +9.3% year over year, non-GAAP net profit of 0.34 billion yuan, and net margin of 4.8%. The company continued to expand its stores steadily in the first half of the year. Under the cost-effective consumption trend, the decline in ASP affected revenue growth. At the same time, along with the increase in the share of its own products and the increase in scale effect, the company's gross margin and expense ratio improved markedly, and profit growth potential driven by steady profit growth over the long term, and maintained a “highly recommended” rating.
Stores continue to expand steadily, and the decline in ASP under the cost-effective consumption trend affects revenue growth. 2024H1 expects the Group's revenue to be +9.3% year-on-year, and the growth rate is slowing down, mainly due to a decline in consumer orders, a gradual shift in the selection of tires and auto parts at lower prices with quality assurance in an environment where consumption is recovering weakly, and the maintenance cycle is also lengthening. Judging from the pace of store expansion, the company maintained a relatively steady pace of opening stores during the off-season in the automotive aftermarket in the first half of the year, adding about 400+ stores, and is expected to achieve the target of 1000+ store expansion throughout the year. In the medium to long term, high-quality and affordable products from the company's own brands are relatively beneficial under the cost-effective consumption trend, and are expected to continue to drive steady growth.
Gross profit and expense ratios improved markedly, and profits grew steadily. 2024H1 continues to increase the revenue share of its own automated control products, while continuously increasing its bargaining power with upstream suppliers due to scale effects. The 24H1 gross margin is expected to reach 25.8%, a significant improvement over the previous year; on the cost side, the company continues to improve franchisee system management and operation efficiency and strengthen cost control, and the 24H1 fee ratio is expected to drop nearly 1% year on year. On the profit side, improvements in gross profit and expenses have driven steady profit growth. 24H1 is expected to achieve non-GAAP net profit of 0.34 billion, with a net profit margin of about 4.8%. In the long run, there is still plenty of room for optimization in Tourover's own product structure. At the same time, the company, as a leading channel provider in the industry, will continue to enhance its bargaining power, which is expected to drive continuous improvement in gross profit and net profit levels.
As a leading automotive aftermarket, Tourover has significant supply chain and management advantages, and its long-term competitiveness is stable. In the long run, as the largest independent online and offline automobile after-sales channel in China, Tourover has significant advantages in terms of scale, supply chain, and franchisee management. In terms of scale, the number of stores reached 6,300+ by the end of 2024H1, leading the industry; in addition, the company has accumulated rich supply chain resources to build barriers based on first-mover and scale advantages. At the same time, the continuous expansion of its own products and the continuous increase in structural share is expected to gradually improve the company's product and price competitiveness and profit level.
Investment advice: Optimistic about the company's stable barriers and profit growth potential driven by increased share of its own products and improved operating efficiency, the 2024-2026 non-GAAP net profit is expected to be 0.8/1.2/1.5 billion, giving 2024 non-GAAP net profit 20 times PE, corresponding to a target price of HK$21.62 per share, maintaining the “Highly Recommended” rating.
Risk warning: macroeconomic risks; increased industry competition; single-store revenue declines; store expansion falls short of expectations.