The Company starts Autohome ATHM with a no-moat rating and a fair value estimate of US$29.20 per ADS (HK$56.70 per share). This falls into the realm of his three stars on Morningstar. Autohome hosts 62.7 million daily active users (DAUs) as of June 2023, making it China’s largest online automotive platform as measured by user traffic. We like the company for its leading position among auto media platforms, but as traffic growth slows to teenage levels and spending from automakers and dealers declines, AutoHome’s Growth in traditional advertising appears to have peaked between 2020 and 2022. On the other hand, return on investment is expected to continue to decline due to rising content and traffic costs. We predict that the average net profit margin will decline to 27% in 2023-25, compared to 35% over the past five years.
Leveraging its extensive reach to potential car buyers, it has become one of the go-to automotive advertising media platforms for car manufacturers and dealers. The company serves 100 automotive brands and more than 24,000 paying dealers as of the end of 2022. It is believed to have penetrated almost all car brands and the majority of dealers in China. However, Autohome’s ability to monetize its large user traffic has weakened in recent years as the market has become saturated. The average revenue per mobile DAU decreased from 246 yuan in 2018 to 128 yuan in 2022.
Coupled with competition from Tencent-backed BitAuto and ByteDance-backed Dongchedi, traffic acquisition costs are expected to remain high and sales and marketing expense ratios will continue to widen, from less than 30% before 2017 to 2025 by 2025. We predict it will reach 42%. As users spend more and more time on social networks and short video platforms, Autohome aims to enhance user engagement with content expertly created by our in-house editorial team and key opinion leaders. increased spending. Investments in content provision inevitably led to content costs rising 12% to 76% year over year, even as revenues declined 4% to 16% from 2021 to 2022.
The author owns no shares in any securities mentioned in this article.
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