preface:
The Lunar Year of the Tiger is approaching, and another platform-based enterprise invested by Tencent's "Goose Factory" has launched a sprint to the Hong Kong stock IPO market.
On January 24, 2022, according to the disclosure of the Hong Kong Stock Exchange, Tuhu Yangche submitted an IPO application and hired four sponsors, Goldman Sachs, CICC, Bank of America Securities and UBS, to jointly "sponsor and escort".
Tuhu Car Has always been an important chess piece of Goose Factory in the domestic auto service market. According to the China Insight Consulting report, Tuhu Car is the largest community of car owners gathered by Chinese auto service providers. Tencent is one of the "gold lords" behind Tuhu's car. According to the prospectus, Tencent's shareholding ratio before the IPO was 19.41%, which was the largest institutional shareholder of Tuhu Yangche.
This time, Tuhu Yangche adopted the structure of the same share and different rights to apply for listing in Hong Kong, which is another Tencent-invested enterprise after WeDoctor to apply for listing in Hong Kong in the form of different rights of the same shares. However, the IPO application submitted by WeDoctor has been "invalidated", which means that WeDoctor's first IPO trip has collapsed on the Hong Kong Stock Exchange.
In addition, although Tuhu Car is engaged in different industries from WeDoctor, it has many similarities. For example, the larger the scale of revenue, the greater the loss; the platform of many well-known investment institutions; both are platform-based enterprises, and so on.
The largest independent automotive service platform
Founded in 2011, Tuhu Car was mainly engaged in online car service retail platforms in the early days, mainly selling some auto parts and car maintenance products, and the company's popularity is not high.
However, the turning point was in 2015, after Tuhu Car completed the C+ round of financing in 2015, it began to explore the offline market for automobile services, and opened its first Tuhu workshop store in 2016, and established an online and offline integrated business model for the first time. In the same year, Tuhu Yangche completed a financing of 100 million yuan, introducing Baidu, Goldman Sachs, Yaxia Automobile and other institutional investors.
In the following years, while enriching its auto service portfolio, Tuhu Yangche gradually penetrated into major core provinces and cities across the country and entered major residential communities through the crazy expansion model of "financing - opening stores (including cooperation methods)".
Over the years, many car owners in first-tier cities have the illusion that they can see the "Tuhu Car" maintenance shop in less than a few kilometers.
According to the prospectus, Tuhu Yangche has more than 3,300 Tuhu workshop stores and more than 33,000 cooperative stores across the country, covering most prefecture-level cities. According to the China Insight Consulting report, Tuhu Car is China's leading online and offline integrated car service platform, and as of September 30, 2021, Tuhu Car is the largest independent car service platform in China in terms of revenue and number of car service stores operated.
Not only that, Tuhu Car can grow into the country's largest independent car service platform overnight, in addition to the crazy opening of stores, through the "100 yuan gift package", "9.9 yuan car wash", "group", "second kill" and other preferential activities, attracting a large number of new and old users to spend online and offline on Tuhu car.
With the blessing of store expansion and preferential activities, the number of Tuhu car owners has increased significantly, and it has rapidly grown into the largest car owner community in China.
According to the prospectus, as of September 30, 2021, Tuhu Yangche's APP "Tuhu Yangche" and online interface had 72.8 million registered users. For the 12 months ended September 30, 2021, it had 13.9 million trading users, an increase of 35.6% year-on-year.
According to the China Insight Consulting report, Tuhu's active users reached 10 million in September 2021, becoming the largest owner community of Chinese auto service providers.
Behind the largest independent car service platform: three years of losses of more than 10 billion
In just a few years, Tuhu's growth rate of car breeding has been amazing to become China's largest independent car service platform and the largest car owner community gathered by Chinese auto service providers.
Behind the rapid growth rate of Tuhu Car, it has a lot to do with the business strategy of "burning money". Such a model has great similarities with the online community group purchase, burning money to grab the market, and expanding the scale.
According to the prospectus, in 2019, 2020 and the first nine months of 2021, Tuhu Car achieved revenue of RMB7.04 billion (the same unit below), RMB8.753 billion and RMB8.442 billion, respectively, and losses during the annual period were RMB3.428 billion, RMB3.928 billion and RMB4.435 billion, respectively. In the past three years, Tuhu has accumulated losses of 11.791 billion yuan.
In fact, behind the loss of more than 10 billion yuan in the past three years, like other new economy companies and Internet companies that are still in the loss stage, the annual losses are huge, and a large part of them is related to the changes in the fair value brought about by the company's use of equity to pay expenses and inject intangible assets.
According to the prospectus, excluding the impact of the relevant fair value change, the adjusted net profit loss is a narrowing situation. In 2019, 2020 and the first nine months of 2021, Tuhu's adjusted net losses were $1,036 million, $970 million and $902 million, respectively. In the past three years, the cumulative net loss of Tuhu Car is 2.9 billion yuan.
After excluding the change in fair value value, the reason why Tuhu Car still has a loss is largely related to the company's pursuit of large-scale growth, the increase in advertising and promotion expenses paid, and the increase in new store expenditure. Especially when it comes to getting traffic, the expenses are the greatest.
According to the prospectus, among the "three fees" of Tuhu Car, the largest expenditure is sales and marketing expenses. In 2019, 2020 and the first nine months of 2021, Tuhu's sales and marketing expenses were RMB1 billion, RMB1.3 billion and RMB1.2 billion, respectively. Among them, in the first nine months of 2021, the expenditure on obtaining network traffic and media advertising was 548 million yuan, accounting for about 45.7% of sales and marketing expenditure.
The opportunities and challenges behind the "burning money" expansion
From an objective point of view, Internet platform companies such as Tuhu Yangche have become the norm in the capital market by burning the money of institutional investors and expanding on a large scale. However, in a short period of time, the advantages and disadvantages brought by the model of "burning money and quick success" are also obvious.
In terms of advantages, Tuhu Yangche is in a track with good growth potential, which is also the lowest investment logic of a number of well-known investment institutions, including Tencent, Goldman Sachs, Sequoia, etc., who have entered the game of Tuhu Yangche.
Driven by the large and growing car ownership and increasing age, China's automotive service market grew at a compound annual growth rate of 12.3% from 2016 to 2020, making it one of the fastest growing countries in the global automotive services market, according to the China Insight Consulting report. According to GMV, the size of China's automotive service market is RMB1,026.8 billion in 2020 and is expected to reach RMB1,650.8 billion by 2025, with a compound annual growth rate of 10.0%.
As a leading online and offline integrated automobile service platform in China, Tuhu Yangche is expected to become one of the main beneficiaries of the trillion incremental dividend in China's automotive service market with its widely recognized brand, huge customer base, rich product supply, standardized service and strong digital capabilities. Especially in the fast-growing IAM market, it is expected to further consolidate its leading position by virtue of its first-mover advantage.
However, due to the overly aggressive expansion strategy, Tuhu's car management capabilities still need to be improved. Especially in terms of store management and after-sales service.
In the consumer complaint website black cat complaints, complaints about the maintenance level, service attitude, and quality of consumer fraud accessories are not uncommon, such as "After Tuhu car cleaning carbon project, improper installation of the fire nozzle caused 1 cylinder of nozzle to be stuck and unable to be taken out", "Tuhu car customer service perfunctory does not solve the problem, Yuantong Express delays delivery" and so on.
In addition, with the rise of new energy vehicles in the past two years, the car maintenance market, one of the important sources of income for Tuhu Car, has undergone major changes. For example, the increase in new energy vehicles has led to a decline in demand for oil, filters, and ignition-related components.
In this context, how to stabilize the impact of the reduction of the demand scale of such products and enter the automotive service market related to new energy vehicles will be one of the important challenges that Tuhu Car will face in the future.
The last challenge is that the current competition in China's auto service market is extremely fierce and scattered, and many Internet giants are eyeing the track. It is understood that at present, Ali, Jingdong, etc. have been laid out in this market, including The Beijing Automobile Club and Tmall Car, among which the franchise stores of Tmall Car have exceeded 1700.
In addition, more than a dozen auto service providers, including Tutai Car, Happy Car, Easy Car, and LeChebang, have been accelerating their digital construction and seeking to occupy a place in the trillion-dollar auto service track.
In this context, it is not excluded that this road will jump out of the way to bite the gold, using the same expansion model of Tuhu Car, constantly stirring up the auto service market, and then bringing competitive pressure and uncertain business risks to Tuhu Car.
The author | Hua Rong
Edit the | Sukie