Autohome Inc.

ATHM Details

Autohome Inc. (NYSE: ATHM) is a China-based automotive internet platform that offers interactive content and tools to automobile buyers, manufactures, and dealers. Its operating segments are 1) Media Services, offering targeted-marketing solutions for brand and sales promotion, 2) Leads Generation Services, enabling dealers to create their online stores, list pricing and promotional information, place advertisements, and manage customer relationships, and 3) Online Marketplace & Others, providing facilitation services and other platform-based services for new and used car transactions. As of September 23, 2021, ATHM's market capitalization stood at USD 5.23 billion, with 127.35 million American Depositary Shares (ADS) listed and outstanding (each ADS representing four Class A ordinary shares). 

Q2FY21 Results: ATHM reported a YoY decline of 16.22% in total revenue to RMB 1.94 billion in Q2FY21 (ended June 30, 2021) from RMB 2.31 billion in Q2FY20, primarily due to a 35.65% YoY decrease in revenue from the Media services segment. Net income for Q2FY21 was RMB 746.71 million vs. RMB 824.48 million in Q2FY20. As of June 30, 2021, the company had cash & cash equivalents (including short-term investments) of RMB 18.43 billion and no outstanding debt.

Key Risks: Yun Chen Capital Caymen, a subsidiary of Ping An Group, controlled 49.0% of ATHM's common stock as of December 31, 2020, giving it significant control over its operations, which constrains the ability of other shareholders to influence corporate decisions.

Moreover, the Chinese authorities' crackdown on its US-listed businesses and the consequent possibility of stricter rules could dent its operations. This is after the passage of a bill in the US, which could lead to the delisting of some Chinese companies from the country's exchanges (in case the US authorities cannot satisfactorily audit the company for three consecutive years). These constitute significant political and regulatory risks for the firm.

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company's NTM 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 (Source: REFINITIV)

Stock Recommendation: ATHM's stock price has declined 34.41% in the past three months and is currently leaning towards the lower end of its 52-week range of USD 35.65 to USD 147.67. The stock is currently trading lower than its 50 and 200 DMA levels, and its RSI Index is at 40.23. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 47.64. Considering the correction in the stock price, current valuation, and associated risks, we recommend a "Hold" rating on the stock at the closing price of USD 41.27, up 0.36% as of September 23, 2021.

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

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