Key points of investment
We expect that in the first half of 2024, the company's revenue will increase 10% year over year to 7.16 billion yuan, adjusted net profit will increase 56% year over year to 0.33 billion yuan, and adjusted net interest rate will increase by 1.4 pct to 4.7% year on year.
Tourover's share is rising steadily under pressure from industry demand, and we expect 24H1 revenue growth of 10%. Demand for automotive services has been under pressure since April '23 due to the impact of the 23-year base and consumer environment. According to F6 Auto Technology, the cumulative output value and number of units (excluding car washes) in the 24H1 post-market both increased slightly by 1% year on year, and the number of units entering the factory in Q1/Q2 was +2%/-1%, respectively. By category, the output value of maintenance/sheet spray/tire/maintenance/beauty/boutique was +4%/+2%/level/ -3%/-6%-14% compared to the same period, and optional businesses were more clearly affected by the external environment. Tourover's advantage in terms of product cost performance is further highlighted. Coupled with the expansion of stores, we expect the 24H1 share to increase further. The revenue growth rate is higher than that of the market, and the number of stores exceeds 6310. According to F6 Auto Technology, the 24H1 medium and large chain/small chain/single store numbers remained flat compared to +5%/-4%/, respectively, and leading players performed better. We are optimistic that the company will continue to increase its share of the number of units entered the factory based on the advantages of scale. There was pressure on the customer unit price level, affecting the company's same-store performance and driving the overall year-on-year revenue growth rate to slow.
The increase in the share of revenue from self-owned products is compounded by optimization of costs and expenses. We expect the 24H1 adjusted net interest rate to increase by 1.4 pct year-on-year. (1) Under the trend of more rational consumption, the company's own products with affordable prices and high gross margins are expected to usher in a better development environment. We are optimistic that the increase in the revenue share of the company's own products will drive an increase in overall gross margin. (2) As a downstream channel with significantly better sales than the market, the company's bargaining power with upstream suppliers is expected to be further increased. We expect the overall product cost price to be better controlled, which will drive an increase in gross margin. Overall costs are also expected to remain steady. The company's 24H1 gross margin/adjusted net margin is expected to achieve 25%/4.7%, respectively, up 0.8/1.4pct year on year, and adjusted net margin up 0.9 pct month-on-month.
Profit forecast and investment rating: Considering that demand for automotive services was weaker than our expectations, but the company's profit trend was better than our expectations, we maintained the company's 24-26 adjusted net profit forecast of 0.736/1.228/1.777 billion yuan, corresponding to 18/11/8 times PE, maintaining a “buy” rating.
Risk warning: demand falls short of expectations, competition intensifies, demand for NEV services falls short of expectations