Autohome Inc.

ATHM Details

Autohome Inc. (NYSE: ATHM) is China's most popular online site for car buyers. It provides automobile users with original and AI-generated content, a comprehensive automobile library, and substantial automobile listing information, spanning the complete car buying and ownership cycle. ATHM's "Autohome Mall," a full-service online transaction platform, helps automakers and dealers exclusive deals. ATHM had 127.35 million American Depositary Shares (ADS) listed and outstanding (each ADS representing four Class A ordinary shares). 

Latest News:

• Dividend Declaration: The firm declared a dividend of USD 0.53 per ADS, which will be paid on April 05, 2022, for ADS holders. The annual dividend has been established at an amount equal to 20% of the company's net income in the preceding fiscal year, according to the company's yearly dividend policy adopted on November 04, 2019.

FY21 Results:

• Fall in Topline: Due to a fall in revenues from media and lead generation services, ATHM reported a YoY decrease in total net revenues to RMB 7.24 billion in FY21 (ended December 31, 2021) from RMB 8.66 billion in FY20.
• Healthy Balance Sheet: As of December 31, 2021, the company had cash & cash equivalents (including short-term investments) of RMB 20.73 billion with no outstanding debt.
• Share Repurchase: The company has repurchased 432,653 American depositary shares (ADS) for a total cost of about USD 12.7 million as of February 22, 2022.

Key Risks:

• Voting Concentration Risk: As of December 31, 2020, Yun Chen Capital Caymen, a subsidiary of Ping An Group, owned 49.0% of ATHM's common shares, giving it significant control over its operations and limiting other shareholders' ability to influence corporate decisions.
• Regulatory and Political Risk: The Chinese authorities' recent crackdown on its US-listed businesses and the consequent possibility of stricter rules could dent its operations. After the passage of a bill in the US, this 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 Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

ATHM's stock price has fallen 59.34% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 25.00 to USD 119.96. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 38.96.

Considering the significant correction in the stock price in the past nine months, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 31.25, up 2.16% as of March 01, 2022, 10:18 AM ET.

Three-Year Technical Price Chart (as of March 01, 2022, at 10:18 AM ET). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.