Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Autohome Inc (ATHM, Financial) reported a steady growth in net revenues, with a 2.2% year-over-year increase to RMB1.87 billion.
- Revenues from the online marketplace and other businesses maintained double-digit growth, reaching 33.1% of total revenue.
- The company achieved a healthy profitability with an adjusted net income of RMB5.72 billion and an adjusted net profit margin of 30.6%.
- Autohome Inc (ATHM) expanded its new retail business reach, intensifying penetration from high-tier to low-tier cities.
- The company continues to drive product innovation and upgrade, leveraging smart series products to introduce a comprehensive digital business management platform for dealership partners.
Negative Points
- The ongoing price war in the auto market has lasted for over 500 days, impacting sales and profitability for automakers and dealers.
- The used car market is under pressure due to declining new car prices, resulting in a 1% year-on-year drop in used car sales in June.
- The inventory alert index for Chinese dealers is high, with luxury brands facing the most significant pressure.
- More than 80% of BBA dealers failed to meet their sales goals in the first half of the year, leading to potential closures.
- Operating expenses, including general and administrative expenses, increased compared to the same period last year, impacting overall profitability.
Q & A Highlights
Q: Recently, we saw some luxury car brands exit the price war. What do you think is the reason behind this? Also, how will the recent government policies impact the industry?
A: The price war has lasted over 500 days, and luxury brands like BMW and Mercedes-Benz have withdrawn due to declining sales, brand image concerns, and dealer profitability issues. The new government policies, including increased subsidies for NEV purchases, are expected to drive significant car consumption and benefit Autohome's NEV business.
Q: What is the latest situation in the used car market given the recent price reductions by OEMs? Have you observed any improvements?
A: The used car market is under pressure due to declining new car prices, resulting in a 1% year-on-year drop in sales in June. Despite short-term challenges, the long-term potential remains strong, and Autohome is focusing on enhancing its product offerings to support market growth.
Q: Have there been any closures of traditional ICE dealers recently, and do you expect more in the future?
A: Yes, nearly 5,000 stores have shut down in the first half of the year. This is part of an industry restructuring due to the rise of NEVs and penetration into lower-tier cities. Autohome is actively supporting dealers through new retail initiatives and digital tools.
Q: How is Autohome addressing competition from other internet platforms in the lead generation business?
A: Autohome focuses on content innovation, user experience enhancement, and expanding cooperation channels. The company leverages its expertise in the automotive vertical to offer comprehensive services throughout the car lifecycle.
Q: Given Autohome's strong cash balance and stable profits, what are the plans for potential special dividends or share buyback programs?
A: Autohome has been increasing its dividend payout over the past few years. From 2024 to 2026, the annual dividend payout will be no less than RMB1.5 billion, reflecting a commitment to returning value to shareholders.
Q: What are the expansion plans for Autohome's new retail model for NEVs, particularly the satellite plan?
A: Since launching the first offline store in September 2022, Autohome has established Space stores in 28 cities and satellite stores in five cities. The satellite model aims to cover more low-tier cities, enhancing reach and coverage.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
