With the continuous increase in the number of automobiles, the potential of the automotive aftermarket is gradually being tapped, bringing new growth points to the industry. In particular, China's new energy vehicles have entered the stage of large-scale development and acceleration, and the next decade will still be a "golden age" of new energy vehicles. Roland Berger predicts that by 2030, new energy vehicles will account for more than 70% of China's auto market.
"With the strength of the good wind, send me to the clouds". In this critical market period, as the "first stock in the independent after-sales service market for automobiles", the allocation value of Tuhu-W (09690) has been highly recognized by the capital market.
Recently, the Shanghai Stock Exchange and the Shenzhen Stock Exchange have successively issued notices on the adjustment of the Hong Kong Stock Connect, and Tuhu has been included in the list of Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect at the same time, effective from April 26. Affected by this good news, when the market opened on April 26, Tuhu rose sharply at the opening, rising by more than 16% throughout the day.
Received the "double inclusion" of the Hong Kong Stock Connect in Shanghai and Shenzhen, and high-quality enterprises ushered in liquidity dividends
It is understood that the Hong Kong Stock Connect is the main channel for mainland investors to invest in Hong Kong stocks, on the one hand, there is an entry threshold for entering the Hong Kong Stock Connect trading, and mainland investors have requirements in their accounts and trading funds, generally large investors or institutional investors; On the other hand, there are also requirements on the subject matter, which are generally the constituent stocks of the Hang Seng Large Cap Index, the constituent stocks of the Hang Seng Mid Cap Index, the constituent stocks of the Hang Seng Small Cap Index and the A+H companies listed on the Shanghai Stock Exchange and the Hong Kong Stock Exchange. Therefore, there has been a saying in the Hong Kong stock market that "only high-quality companies can be shortlisted for the Hong Kong Stock Connect".
Although the scope of investment by mainland investors is limited, the above-mentioned constituent stocks are a collection of excellent targets in the Hong Kong stock market, and the included targets are obviously more actively traded due to the Hong Kong Stock Connect channel. According to the official data of the Hong Kong Stock Exchange, in the first quarter of 2024, the average daily turnover of the Hong Kong securities market (including the main board and GEM) was HK$99.4 billion, and the average daily turnover of the Hong Kong Stock Connect was as high as HK$31 billion, contributing more than one-third of the liquidity to the Hong Kong stock market.
For Hong Kong listed companies, being included in the Hong Kong Stock Connect not only means greater exposure, but also represents "authoritative" certification, and obtaining the "double inclusion" of the Shanghai and Shenzhen Stock Connect is tantamount to giving a "booster" to Tuhu's future market performance.
Not only that, for a Hong Kong listed company, liquidity is a key factor supporting the company's valuation, and being included in the Hong Kong Stock Connect will significantly improve the liquidity of the listed company, and it is of great significance for Tuhu to become a "double inclusion" stock in the Shanghai and Shenzhen Stock Connect.
At present, Tuhu has been officially included in the Hong Kong Stock Connect, which fully shows that the company has reached the market-leading level in terms of market capitalization and liquidity, which means that the company has received a higher degree of recognition. At the same time, it also means that mainland investors who are optimistic about its value can buy directly through the Hong Kong Stock Connect channel, which will have a positive effect on the company's share price and trading volume. Referring to the accelerated rise in the stock price of some high-quality listed companies after being included in the Hong Kong Stock Connect, companies with high-quality assets and steady progress will also be favored by "North Water", accelerating the company's stock price to move closer to intrinsic value.
It is worth mentioning that Tuhu, as an enterprise with weighted voting rights, faces stricter standards for inclusion in the Hong Kong Stock Connect, and should additionally meet the requirements of an average daily market value of not less than HK$20 billion and a total turnover of no less than HK$6 billion within 6 months after listing. This level of trading activity means that Tuhu has attracted much attention from the market before it entered the list of Hong Kong Stock Connect.
It is expected that Tuhu will receive more attention from investors when it enters the Hong Kong Stock Connect list, especially the institutional funds that track the Hong Kong Stock Connect, and are expected to receive incremental injections from passive funds.
Growth and certainty resonate, and continue to be verified by performance
Zhitong Financial APP learned that as China's largest independent car service platform, Tuhu has been deeply involved in the automotive aftermarket for 13 years, and has established cooperation with many well-known brands at home and abroad by virtue of high-density offline network coverage and digital standardized service level, providing reliable, affordable and convenient car maintenance services, and is deeply trusted by car owners.
This is also verified by the company's rapid growth performance: the latest financial report shows that in 2023, Tuhu will achieve revenue of approximately RMB13.601 billion, a year-on-year increase of 17.8%; Adjusted net profit of approximately $481 million, compared to an adjusted net loss of approximately $552 million for the same period in 2022; Profit attributable to owners of the parent company was approximately RMB6.703 billion, achieving annual profit for the first time.
It is not difficult to find that Tuhu is not only in a state of continuous profitability, but also continues to expand its profitability and increase its profitability. From the perspective of gross profit margin indicators, the company's gross profit margin increased significantly and hit a record high, from 3.9% in 2019 to 24.7% in 2023, and the annual gross profit reached 3.36 billion yuan, a year-on-year increase of 48%.
In terms of store size, Tuhu has the largest and continuously expanding store network in China. For the whole year of 2023, Tuhu will add 1,256 stores, bringing the number of future tiger car maintenance workshops to 5,909, covering all provinces in Chinese mainland.
In terms of user scale, as of the end of 2023, Tuhu's users are still growing steadily, with the number of registered users on the platform exceeding 115 million, and the cumulative number of transaction users reaching a record high of 19.3 million throughout the year, making it the largest community of car owners in China.
Based on the scale advantages of stores and users, as well as the advantages of word-of-mouth for franchisees and customers, Tuhu can attract more high-quality suppliers, get more advantageous purchase prices, and then improve the profit level. According to public information, in terms of cooperation with genuine brands, Tuhu has cooperated with Continental, Dunlop, Double Money, Michelin, Shell and ExxonMobil in various fields, in order to bring consumers more transparent, comfortable and traceable services.
According to the CIC report, Tuhu is one of the largest independent auto service platforms in China in terms of annual revenue in 2023 and the number of auto service stores in operation as of the end of December 2023, ranking among the top independent third parties in the aftermarket in terms of the number of stores, growth rate and revenue.
Based on the outstanding performance and predictable growth, analysts from major well-known institutions at home and abroad have also given positive comments. Among them, Huatai Securities, Minsheng Securities, Bank of Communications International, Guotai Junan and many other well-known securities institutions at home and abroad expressed their optimism about their future with ratings such as "buy" and "overweight" in the update report.
Conform to the general trend of new energy transformation and embrace ESG to demonstrate a stable background
Just like smartphones replace feature phones, it is now an irreversible trend for new energy vehicles to replace traditional fuel vehicles. According to the latest data released by the Passenger Car Association, from April 1 to 14, 2024, the passenger car market retailed 516,000 units, a year-on-year decrease of 11%; The retail sales of new energy vehicles reached 260,000 units, a year-on-year increase of 32%. The penetration rate of new energy vehicles exceeded 50% for the first time, reaching 50.39%. Behind the penetration rate of more than 50%, China's new energy vehicles are developing at an astonishing speed.
Standing at the current point in time, the service innovation and model upgrading of the automotive aftermarket have become a new driving force for the development of the industry. As a leader in the industry, Tuhu is keenly aware of the general trend of new energy, and takes the lead in actively exploring more feasible and cost-effective solutions to provide specialized customized car services for new energy vehicles.
According to the ESG report released by Tuhu on April 25, the company's new energy business transformation has achieved initial results - the new energy penetration rate has exceeded 7%, the number of new energy trading users has exceeded 1.3 million, and the number of battery service orders has exceeded 22,000, ranking first in the industry.
According to the ESG report, during the reporting period, Tuhu has cooperated with 13 power battery manufacturers and 6 insurance companies in battery after-sales maintenance. In 2023, Tuhu provided a total of 22,000 battery orders for NEV vehicle owners, ranking first in the industry, with a year-on-year increase of more than 60%, covering more than 280 cities and towns.
In terms of car beauty and modification, which are in high demand for new energy vehicles, Tuhu has also long had a layout. Tuhu has been deeply engaged in the field of car beauty represented by window film, invisible car clothing and color change film, and its business has covered more than 300 cities across the country.
Due to the large difference between the maintenance business of new energy vehicles and fuel vehicles, plug-in hybrid electric vehicles need to maintain the engine and battery. In response to the different characteristics of plug-in hybrid vehicles and pure electric vehicles, Tuhu has launched a special service for new energy vehicles, which is upgraded on the basis of manufacturers' maintenance requirements to meet the higher-level needs of new energy vehicle owners. According to the ESG report, in 2023, the penetration rate of the total number of users of this model in China will reach 9.3% in terms of the number of orders placed by hybrid vehicle users in Tuhu.
Focusing on the pain points of high-quality customer consumption, Tuhu has established a set of online and offline integrated large-scale chain store models that are difficult to replicate by strong control of stores, integration of supply chains, and mastery of consumer data. This model can make demand transparent and quantitatively tracked, realize the integration of online and offline demand, simplify the supply chain system, reduce the intermediate circulation level, and reduce the terminal price; Offline stores can provide multi-category services, and achieve the unification of standards in technical construction, service process, price system, etc., which is conducive to transforming customer demand from low-frequency demand to high-frequency demand.
Benefiting from standardized business processes, customer-centric quality services and more convenient store coverage due to scale expansion, Tuhu's user reputation has also continued to improve. According to the data, as of the second half of 2023, the customer satisfaction rate of Tuhu Car Workshop has reached a record high of 4.78 out of 5.
Although there have always been many dimensions to judging a company's merits, customer loyalty is a key success factor for a company's profitable growth. It can also be seen from the above indicators that customer satisfaction often means that customers recognize the quality and service under the company's business model, and Tuhu is also transforming the efforts made in the field of user service into a new business momentum.
In addition, Tuhu has also participated in the formulation of three standards for the new energy industry, namely the first after-sales service standard for new energy vehicles in mainland China, the first safety inspection standard for new energy vehicles in China, and the first professional skill evaluation standard for new energy vehicle maintenance technicians in China.
All of the above achievements show that Tuhu has shown strong potential in business development and has released certain good expectations to the market. Nowadays, it has become the target of Shenzhen-Hong Kong Stock Connect and Shanghai-Hong Kong Stock Connect at the same time, which means that the company's popularity and influence in the domestic capital market have been fully affirmed, and it is expected to attract more investors to participate in the future, which will have a positive effect on circulation and liquidity, and finally achieve a rise in volume and price in the secondary market while fully enjoying the market liquidity dividend.