The author | Eastland
The head art | Visual China
On January 24, 2022, Tuhu Yangche submitted a listing application to the Hong Kong Stock Exchange.
Starting with a "seed round" of 9.29 million yuan in 2013, Tuhu Car's 16 rounds of financing totaled about US$1.4 billion. The last two rounds are F-2 and F-3 in 2021, raising a total of $400 million. In the first three quarters of 2021, Tuhoo's net cash inflow from financing activities was 1.38 billion, but the net outflow from operating activities was 455 million, the net outflow from investment activities was 690 million, and the cash on the book at the end of September was 1.43 billion, and the balance of accounts payable/notes was 2.94 billion (the number of turnover days has increased from 56 days in 2019 to 98 days in 2020). #上市融资迫在眉睫 #
Sequoia, Joy, Fangyuan and Tencent are persistent in their efforts to raise Cars for Tuhu, insist on "betting" on the trillion-dollar after-sales service market, and finally send Tuhu Cars to the gate of the capital market with 16 "blood transfusions".
202 - 36,600, how many Tuhu stores?
On the online and offline integrated vehicle service platform built by Tuhu Yangche, 14 million trading users, 36,000 stores and 3,000 suppliers constitute an ecosystem.
Due to the particularity of automotive-related products and services, the fulfillment of contracts is highly dependent on offline stores.
For example, change tires. Online orders are easy, delivery to home is not a problem, but ordinary car owners can "unload the wheel" is already difficult to energy, there is no ability to pick up old tires, replace new tires, not to mention the balance, four-wheel positioning. Similarly, online product sales and offline services such as changing oil, installing driving recorders, and filming are inseparable. But this is not a "pain point", the seller is responsible for the installation or the consumer finds a store to install, it is not a problem.
Tuhu Car is a vertical e-commerce company of professional auto parts/supplies, with tires with relatively high frequency, relative standardization and relatively high customer unit price as the entry point to attract consumers with cost performance. Then use consumers as "bait" to attract offline stores that can provide installation services.
After having certain offline capabilities (including data accumulation, talent training, online and offline coordination capabilities, etc.), establish an offline service network with self-operated workshop stores and franchised workshop stores as the core.
Tuhu workshop stores are divided into two categories: self-operated workshop stores and franchised factory stores.
At the end of 2019, Tuhu opened 31 new self-operated workshop stores, closed and converted to 19 franchises, a net increase of 12 for the whole year, reaching 127 at the end of the year; the number of franchised factory stores increased from 697 at the beginning of the year to 1296 at the end of the year, a net increase of 599;
At the end of 2020, the number of self-operated workshops and franchised workshops increased to 165 and 2323 respectively. The number of new stores opened in the franchise workshop reached 1,030 throughout the year;
As of the end of September 2021, there were 202 self-employed workshop stores and 3167 franchised workshop stores (managed by 1538 franchisees).
The site selection to operation of the self-operated workshops is completely controlled by Tuhu; the franchised factory stores use the Tuhu brand, and the supply chain, information management and settlement are controlled by Tuhu. In addition to the franchise fee and management fee, the franchisee also pays Tuhu a profit share.
All revenue from the factory store (including online and in-store sales and service fees) is recognized as the "product sales and services" of Tuhu's revenue.
Similar to "annual active users" and "monthly active users", Tuhu's "cooperative store" is defined as "transactions in the past three months". For example, a tyre was installed once for a Tuhu online buyer. As of the end of September 2021, the number of cooperative stores reached 33,000.
Tuhoo claims that the total number of offline stores has reached 36,600, but the 33,000 cooperative stores do not contribute revenue but have tasted services. For example, the courier company entrusted civil aviation to transport goods with the belly of the aircraft, known as "having XXX cooperative Boeing/Airbus", there is no problem,
As the business grows bigger, it is natural to purchase more services, but the scale of procurement cannot be used as a basis for valuation. Tuhu sells 2.6 million tires a month, assuming 2 million of them are installed by 33,000 partner stores. If there are 4 million tires to be installed, the number of cooperative stores may expand to 66,000.
Revenue structure and JD.com "god-like"
Tuhu's revenue is divided into two main categories: products and services, and platform business.
1) "Products and services" is equivalent to JD.com's "product sales"
In 2019, the revenue of "product sales and services" accounted for 96.9%;
In the first three quarters of 2021, the revenue of "product sales and services" was 8 billion yuan, still accounting for 94.4% of revenue; the platform business revenue was 470 million, accounting for 5.6% of revenue.
"Product Sales and Service" revenue mainly comes from "wheel and chassis parts" and "car maintenance", which were 3.68 billion yuan and 2.76 billion yuan in the first three quarters of 2021, accounting for 80.7% of the "sales and service" revenue.
In the first three quarters of 2021, Tuhu's total revenue was 7.13 billion, and tires and maintenance accounted for 76.2%, with a single and fragile source of revenue.
Tuhoo's "products and services" business is equivalent to JD.com's own "product sales" business. In 2020, JD.com's product sales revenue accounted for 87.5% of revenue.
2) "Platform business" is equivalent to JD.com's "service"
Tuhu platform revenue includes service fees, advertising fees and "other new products and services" charged to franchisees.
Tuhoo's franchise fees charged to franchised factory stores account for about three-quarters of the platform's business revenue. In 2020, the franchise fee income reached 300 million, an increase of 79.4% year-on-year; in the first three quarters of 2021, the franchise fee income was 350 million, an increase of 73.6% year-on-year, and the monthly rate per room was about 1400 yuan (based on the average number of franchisees at the beginning and end of the period).
Similar to JD.com, Tuhu's business consists of two parts: "self-operated sales" and "platform services", but Tuhu is more sophisticated:
First of all, the degree of "online and offline integration" of self-operated workshop stores is deeper. Self-operated sales are mainly completed online, and the offline self-operated workshop stores perform the contract, and the offline stores will also directly sell and provide installation services.
Secondly, the fulfillment service of the franchised workshop stores allows the sales of accessories to be closed-loop. The core of Tuhu's "platform service" is to reverse the flow of franchise stores, which have tried to provide performance services, and the essence of the franchise fee and profit sharing paid to Tuhu is commission. #途虎 "one fish, two eats" #
Tuhoo's "platform business" is equivalent to JD.com's "service business". In 2020, JD.com's service revenue accounted for 12.5% of revenue.
Profitability
1) Tuhu's "Three Wallets"
Although tire sales account for 40% of Tuhu's revenue, they are not the largest source of profit.
Tuhu's most profitable business is "Car Maintenance Products and Services" (referred to as maintenance). In the first three quarters of 2021, the maintenance business revenue was 2.76 billion, gross profit was 720 million, and gross profit margin was 26.1%.
The gross profit margin of platform services (referred to as services) is super high. In the first three quarters of 2021, service revenue was 470 million, gross profit was 390 million, and gross profit margin was 83%.
Tires and chassis zero business (hereinafter referred to as tires) gross profit and profit margin are ranked three. In the first three quarters of 2021, revenue and cost were 3.68 billion and 3.36 billion, respectively, and gross profit was 320 million, and gross profit margin was 8.6%.
In the first three quarters of 2021, Tuhu gross profit totaled 1.31 billion yuan and gross profit margin was 15.5% (only 7.4% in 2019). The contribution rates of the three businesses of maintenance, service and tire to gross profit were 55%, 30% and 24% respectively (the sum of the contribution rates is greater than 100%, because the cost of self-operated workshop stores is not amortized into specific businesses).
Self-operated business earns word of mouth, pulls revenue, platform services earn profits, more than half of the gross profit comes from platform services, which coincides with JD.com.
2) The expense rate is inflexible
Tuhu's financial report lists four expenses: operating and support expenses, research and development expenses, sales and marketing expenses, and administrative expenses.
In the first three quarters of 2021, gross profit and gross profit margin were 1.31 billion and 15.6% respectively. The amount of operation, research and development, sales and administration expenses was 470 million, 440 million, 1.23 billion and 220 million respectively, totaling 2.36 billion and a total expense ratio of 27.9%. Expenses far exceed gross profit, with an operating loss of 940 million yuan and a loss ratio of 11.1% in the first three quarters of 2021.
Compared with the "star companies" that burn money recklessly and have a loss rate of more than 100%, Tuhu is quite "restrained", with a loss rate of 1.14 billion yuan and a loss rate of 16.1% in 2019; an operating loss of 910 million yuan in 2020, and a loss rate of 10.4%.
Although the cost control is relatively good, through the study of various expenses, it feels that Tuhu's profit prospects are still not optimistic.
"Operating and Support Expenses"
Mainly used to expand the store network, operation, supervision and travel expenses, should be the relevant expenses of franchised workshops. Both store revenue and operating/management expenses are positively correlated with the number of stores, and the operating expense ratio is difficult to decrease significantly with the expansion of scale. #缺乏弹性 #
In the first three quarters of 2021, the expenditure of franchised and self-operated workshop stores was 470 million and 210 million, respectively, totaling 680 million. The average monthly expenditure is about 1900 yuan (based on the average number of franchise stores at the beginning and end of the period).
As mentioned above, the gross profit margin of "platform service" is high, and the average monthly payment of franchise stores is 1400 yuan, but the operation and support expenses are 1900 yuan. Considering the one-time cost of expanding new stores or some, Tuhu franchise stores cannot be said to open one and lose one, but it is unlikely that Jingdong "makes money by service".
R&D expenses and administrative expenses
Tuhu's R&D expenses and administrative expenses rose steadily, reaching 440 million and 220 million in the first three quarters of 2021, accounting for 7.7% of revenue. 1.7 percentage points higher than in 2019.
It is reasonable to improve the level of technology and management, build a core team, and increase R&D and administrative expenses by a few percentage points before listing, and it is expected to fall after listing.
Sales and marketing expenses
In addition to advertising and promotional activities, Tuhu's sales expenses also cover warehousing, in-store delivery and coupons. Since 2019, the sales expense ratio has remained close to the level of 15%, and there is no downward trend in sight for the time being.
Gross profit margins remain unchanged, and the only way to improve is to suppress the expense ratio. Judging from the nature of Tuhu's various expenses, there is less "money that can be spent or not spent", and most of the expenses are closely related to daily operations, and the cost rate is not high, and the space for compression is limited.
Profitability is difficult to improve in a short period of time, and Tuhu is bound to please investors with its scale expansion. #赚钱是不可能赚钱的 #
Does Tuhu Become JD.com in the automotive service sector?
By the end of 2020, there were 240 million passenger cars in China, with an average age of 5.6 years (the average age of vehicles in the United States and Europe was 12 years), and 70% of the vehicles with a warranty period. In general, car service spending has increased significantly after 6 years of age, and China is at a tipping point.
It is estimated that in 2025, the number of passenger cars in China will reach 347 million units, with an average age of 7.6 years, and the size of the automobile service market will be about 1.65 trillion.
By the end of 2020, there were 714,000 auto service stores in China, of which 30,000 authorized dealers (4S stores) accounted for 60% of the GMV. The remaining 684,000 stores have a chain operation rate of only 7%, and the total GMV of automotive services is 40%.
Car owners suffer 4S working hours, accessories prices are abnormally high for a long time, and the proportion of "fleeing from insurance" is probably not small. The Tuhu model is an important option for car owners to receive car services, and no one wants to succeed.
Although "time, location, and people" are complete, Tuhu's competitors not only have 4S stores, but also giants such as Tmall, JD.com, and Meituan. After-sales installation services, seller arrangements or consumers looking for offline stores are not a problem. With more than 3,000 "workshop stores", Tuhu's advantages of "online and offline integration" are not prominent, and the disadvantages are difficult to ignore:
First: e-commerce is a "traffic black hole", and the proportion of self-owned traffic is directly related to economic benefits. In this regard, Tuhu is not in the same order of magnitude as giants such as Tmall, JD.com, and Meituan. The fundamental reason for the ultimate failure of Suning's "online and offline integration" is the lack of online traffic and high offline costs.
The founder of Tuhu said, "If I have XX traffic, it will be more profitable to sell shirts." But if there is traffic, but also to open thousands of offline shirt stores, it will certainly not make money.
Tuhoo's opening of stores is a helpless move: thousands of offline stores are there, and car owners "look down and don't look up", and they will naturally ask when they need to repair cars and buy accessories, or query through Tuhu APP or mini programs. Offline traffic "feeds back" online, which somewhat makes up for the weakness of Tuhu's lack of traffic.
However, operating more than 3,000 workshop stores is costly. As of the end of September 2021, 2,742 of the 5,429 full-time employees were operating and supporting.
Second: the scale benefits of e-commerce giants are outstanding, and the SKUs to choose from are greatly enriched. Tuhu also opened a flagship store on the e-commerce platform, and after "shopping around 30", consumers are likely to find a lower offer (the same product). "Tuhu cost-effective" is a reputation that is difficult to destroy, especially the e-commerce platform that is extremely convenient for price comparison.
The online self-owned traffic is insufficient, and the "hermit" e-commerce platform "competes on the same stage" with hundreds of friends.
There are thousands of factory stores offline, and there is no capital link between Tuhu and Tuhu. Tuhu collects more than 1,000 yuan per month, which means that the benefits brought to the other party are not too high. If online traffic dries up, offline stores can only rely on geographical location to acquire customers, and the willingness to cooperate with Tuhu has faded.
Tuhu is painting tigers and hopes to succeed!
*The above analysis is for reference only and does not constitute any investment advice