Autohome Inc.

ATHM Details

Autohome Inc. (NYSE: ATHM) is a Chinese online vehicle destination that provides comprehensive, independent, and interactive resources to car buyers, manufactures, and dealers. The company generates revenue from 3 segments, namely 1) Media Services, offering targeted-marketing solutions for brand and sales promotion; 2) Leads Generation Services, which provides dealers with used car listing services, and enables them to create their own stores, list pricing, and place advertisements; and 3) Online Marketplace & Others, providing facilitation services for new and used car transactions and other platform-based services. As of June 24, 2021, ATHM’s market capitalization stood at USD 16.00 billion, with 127.35 million American Depositary Shares (ADS) listed and outstanding (each ADS representing four ordinary shares).

Q1FY21 Results: The company reported an uptick of 19.07% in total revenue to RMB 1.84 billion in Q1FY21 (ending March 31, 2021) compared to RMB 1.55 billion in Q1FY20, driven by a 73.99% increase in revenue from the Online Marketplace segment. Net income for Q1FY21 was RMB 631.11 million for Q1FY21, as compared to RMB 587.26 million reported in Q1FY20. The company deepened its cooperation with new energy vehicle (NEV) automakers in Q1FY21, and also upgraded its main app with a more streamlined interface and cleaner functionality, to enhance the user experience and attract younger demographics.

Key Risks:  In FY2020, the top five automobile customers provided 22.7% of the company's media services revenue. As a result, the loss of even one of these customers can hurt ATHM's operating results. Further, prolonged frictions between the US and China, and the recent passage of a bill in the US that could lead to the delisting of some Chinese companies from the country’s exchanges (in case the US authorities are unable to satisfactorily audit the company for three consecutive years) expose the stock to significant political and regulatory risks. Though a solution to the standoff could be negotiated in the medium term (before the earliest possible delistings begin in 2024), the companies that might not be able to fulfill the revised standards are at risk.

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

ATHM Daily Technical Chart

Stock Recommendation: ATHM has declined by 33.38% in the past 3 months and is currently trading close to the lower end of the 52-week range of USD 61.38 to USD 147.67. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is 20.97. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 78.63. Given the stock price correction over the last three months, the demand for online vehicle service platforms, solid financial performance, and tremendous growth potential, we recommend a “Buy” rating on the stock at the closing price of USD 62.92, up 0.54% as of June 24, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.