CICC released a research report stating that maintaining the Tourover-W (09690) “outperforming the industry” rating, due to changes in the fair value of convertible and redeemable preferred shares of 6.47 billion yuan due to the IPO, the net profit in 2023 was raised by 6.31 billion yuan to 6.65 billion yuan, and the target price was adjusted to HK$31.8 billion for the first time.
Incident: The company released its 2023 performance forecast: the net profit due to mother was not less than 6.6 billion yuan, a significant profit conversion; mainly due to changes in the fair value of convertible and redeemable preferred shares after the 2023 IPO, a positive contribution of about 6.47 billion yuan, and the adjusted net profit for the whole year was not less than 450 million yuan. Excluding the one-time impact of the IPO, the 2023 results are in line with this forecast.
The main views of CICC are as follows:
Profitability continues to recover, and there are many business highlights.
The bank estimates that the adjusted net interest rates for 1H23 and 2H23 are 3.2% and 3.4% respectively (2023 revenue using CICC forecasts), and profit margins are in an upward channel. Profitability improvements are mainly due to the expansion of the Tourover factory network across the country, increasing the customer base, increasing economies of scale, and increasing premium capacity for the upstream supply chain; 2) continuous improvement of the product structure. On the one hand, the proportion of high-margin proprietary products and exclusive products increased; on the other hand, the revenue structure of the maintenance business improved, and structural optimization of the service category portfolio promoted an increase in gross margin; 3) The company promoted lean management and improved operational efficiency.
Stores are gradually sinking to lower-tier cities, focusing on the speed of expansion and store operations.
Currently, there are 6,000 Tourover stores. The company is in the stage of developing the market from the first and second tier. In response to the sinking market, it has introduced preferential franchise policies according to local conditions, including a policy for old merchants to sink and a policy for new merchants to sink the flag. By providing opening subsidies, franchise fees and management fees have been reduced. Stores in low-tier provinces are lower than in higher-tier cities in terms of customer unit price and early investment, and the bank is expected to gradually contribute to performance growth points.
Positioning the heavy snowy automobile stock market in Changpo, multi-dimensional advantages help to steadily increase market share.
The company focuses on the automotive stock market, which has obvious anti-cyclical characteristics, and provides full life cycle services. Domestic passenger car ownership is on an upward path, and there is plenty of room for improvement. The increase in the average age of existing models has led to an increase in bicycle maintenance expenses, and jointly build room for post-automobile service market growth. Compared with its peers, Tourover has built an online and offline integrated car service platform, and has a leading edge in product pricing, service categories, supply chain management, and store control. The bank believes that as the company maintains a steady pace of scale expansion and actively optimizes product service and operational efficiency, its market share is expected to increase steadily.