The second quarter is expected to usher in the auto market “Little Spring”
Editor’s note: This article comes from the WeChat public account “US Stock Research Agency” (ID: meigushe) , a small assistant to the author.
On February 19, Beijing time, Car House released the fourth quarter of 2019 financial report as of December 31, 2019.
According to the financial report of Autohome, its net revenue was RMB 2.297 billion, a year-on-year increase of 6.5%; the adjusted net profit was not RMB 1.150 billion (approximately USD 165.2 million) without US GAAP. ), A year-on-year increase of 6.9%. Due to better-than-expected financial reports, US stocks closed on Wednesday, and Car House closed up 12.40% to $ 88.62.
Before the latest quarterly financial report released by China Stocks, China was facing the test of new crown pneumonia, and all industries were greatly affected. Under the influence of the epidemic, the auto industry has suffered a lot of tests. How does the Q4 report card of the car home perform? After the epidemic, when will the auto industry come back to life?
01. Revenue growth exceeds market expectations, Core business is still growing steadily
According to the financial report, in the fourth quarter, the net revenue of Auto House was RMB 2.297 billion (approximately $ 334.6 million), an increase of 6.5% compared to RMB 2.878 billion in the same period last year. Net profit was RMB 1,108.1 million (approximatelyUS $ 159.2 million), compared with RMB 10.153 billion for the same period last year. Without US GAAP, adjusted net profit was RMB 1.150 billion (approximately USD 165.2 million), compared with RMB 10.762 billion in the same period last year.
Overall performance in 2019:
Net revenue was RMB 8.482 billion (approximately US $ 1.2096 billion), an increase of 16.4% compared with RMB 7.323 billion in 2018. Net profit attributable to Autohome was RMB 3.200 billion (approximately $ 459.6 million), compared with RMB 2.871 billion in 2018.
Basic and diluted earnings per American Depositary Share were RMB 26.99 (approximately $ 3.88) and RMB 26.77 (approximately $ 3.85), compared to RMB 24.40 and 24.08 during the same period last year. Not in accordance with US GAAP, the net profit attributable to Auto House was RMB 3.408 trillion (approximately $ 489.6 million), compared to RMB 3.0779 billion in 2018.
The core business grew steadily. The annual core business revenue was 6.93 billion yuan, an increase of 8.6% year-on-year. In the fourth quarter, the number of paid dealers exceeded 24,000, and the proportion of self-owned leads increased sharply throughout the year, with their own leads increasing by 20% year-on-year. The financial report also shows that while maintaining the core business stability, the new business of the car home is also growing rapidly. In 2019, the revenue from the online market and other businesses of the automobile home was 1.49 billion yuan, a year-on-year increase of 74.7%, and its proportion of total revenue rose to nearly 18%.
Cash: As of December 31, 2019, Auto House has cash, cash equivalents and short-term investments of RMB 12.80 billion (approximately $ 1.8379 billion). Operating cash flow in 2019 was RMB 2,889.84 million (approximately $ 415 million).
Prospects for the next quarter: Autohome expects that net revenue in the first quarter of fiscal 2020 will reach RMB 1.530 billion (approximately US $ 219.8 million) to RMB 1.580 billion (approximately US $ 227 million).
From the financial report of Autohome, the overall performance is remarkable, especially the cash flow on the books at the current stage to appease many investors. Judging from the growth performance of the core business, despite a slight decrease compared to the previous period, the growth performance for the whole year is still relatively stable. If you look at the full-year car sales data for the auto market in 2019, it is not easy for Car Home to maintain this growth rate.
According to the latest sales data released by the China Automobile Association, the cumulative production and sales of automobiles in China in 2015 were 25.712 million and 25.769 million, respectively, a year-on-year decline of 7.5% and 8.2%. In the general environment where the overall situation of the auto market is not ideal, it is not difficult for car companies to achieve revenue growth, and car homes can maintain such a stable growth rate.Still can see the competitiveness of the car home in the industry.
On the premise of maintaining steady growth of core business, Auto House is also actively exploring new businesses, and it will show some results in 2019. Auto House’s new business relies on digital technology and gradually gains recognition from more dealers, which has also become a major driver of its revenue growth.
Currently, China is still facing the test of new crown pneumonia, and the capital market has expressed some concerns about the Q1 2020 financial reports of many Chinese stocks. This worry is excusable.
The latest statistics of the China Automobile Association show that in January 2020, the national automobile production and sales were 1.783 million and 1.941 million, respectively, a year-on-year decrease of 24.6% and 18.0%. The statistics of the Federation of Passenger Unions show that in January 2020, the retail sales of narrow passenger cars nationwide was approximately 1.694 million, a year-on-year decrease of 21.5%, which will be the lowest growth rate since 2005.
But under the epidemic, we still have to see potential growth points in the crisis.
02. “Sales Barrier Lake” under epidemic situation, The second quarter is expected to usher in the auto market “Little Spring”
As the world’s largest single-country automotive market, affected by this menacing epidemic, the domestic and foreign automotive industries have undergone a test. According to the “2020 Pneumonia Epidemic Impact Insight Report” published by Yiche.com, the domestic auto market has many difficulties. Affected by the epidemic, the trend of passenger cars in China in 2020 will be severely tested. Prevention and control efficiency.
From the perspective of the general environment, the impact of the epidemic on the automotive industry is not small, but car companies are actively taking measures to minimize the negative impact of the epidemic. Under the epidemic, some changes have taken place in the automotive industry. 
I. Epidemic stimulates users’ first purchase demand. Online car retail model may welcome development opportunities
The rapid spread of new pneumonia this time, and the high contagion is an important factor. In view of the highly contagious nature of this epidemic, the importance of owning a private car in a special period can be imagined. According to the test of the car home, there are two important data reflecting the changes in users’ online viewing of cars, one is to see more people and the other is to watch more time.
During the epidemic period, PV per capita continued to increase, PV per capita increased by 25% after the holiday, and the length of stay per capita climbed, and user stickiness was higher, Per capita stay time after the holiday increased by 35%. At the same time, users are more favored by online VR to watch cars, but the decision-making cycle has become longer, from attention to clue investment on average extended by 0.9 days.
During the epidemic, the way users watch cars has also changed from offline to online. Car manufacturers have also launched “online car viewing” services, which include “zero-touch” forms such as live car viewing, online showrooms, and on-site test drives. Relatively speaking, the Internet car e-commerce platform that focuses on online car viewing is still more professional than car manufacturers, and the advantages of the platform represented by the car home are prominent. With certain car purchase requirements, online can also meet some of the user’s car viewing needs, from car brands, prices, evaluations and even VR car viewing experience.
In the long run, short-term user growth is expected to lead to consumer demand. With the help of big data, Car House can better understand user needs, thereby tapping the value of users. Why is there such a prediction? This is because in the post-SARS period, some people concluded that “reducing travel has stimulated three major consumptions: cars, bicycles, and online shopping.” With previous experience after SARS, these three major consumptions are also happening during this new coronary pneumonia.
It is foreseeable that the new retail model of automobiles, mainly based on online experience, car selection, and car purchase, will accelerate development. With the in-depth adjustment of supply and demand relationships, as well as Internet +, big data, AI technology, 5G communications, etc. The rapid development of technology, new retail of automobiles with digitalization, new channels and user experience as the key may become the development direction of automobile enterprises in the new environment.
Second, the low-line market has produced a “selling dammed lake”. After the epidemic, township users may welcome car purchases.
In the low-end market, data detected by Autohome shows that during the Spring Festival, active users in fourth to sixth tier cities increased by 19% year-on-year, and their share increased by 9.3%. As the purchasing power of cities gradually approaches saturation, the importance of growing purchasing power in rural areas will become apparent. The industry predicts that towns and rural areas will continue to be incremental markets in the next five years.
According to industry analysts, during the epidemic, the demand for car purchases by most users in sinking markets was suppressed, leading to the “damped lake” effect of car sales. Once the epidemic situation is over, the “damped lake” effect will quickly appear , The sinking market may usher in “purchase Xiaoyangchun”. Why does the sinking market bring huge growth momentum to the automotive industry? There are three reasons:
First, townspeople have the means to afford cars. According to the data of 58 city car reports in the same city, starting from 2018, rural residents’ income growth and consumer spending growth have been faster than urban residents. In the next few years, per capita disposable income of rural residents will begin to catch up with urban residents. The scale of income determines consumer behavior. At present, the economic pressure of township users on car purchases is not great.
Among them, the proportion of township users with monthly income of more than 8,000 yuan is close to the proportion of Chinese netizens ‘income structure, and the proportion of 5000-8000 yuan’s income is already higher than the proportion of Chinese netizens’ average income structure. The increase in income becomesTownship users are an important factor in car consumption. Under this premise, this will promote low-tier market car consumption to enter the fast track of growth.
Second, the largest proportion of township users are 30-35 years old, and they have a strong desire to buy a car. Users of this age group have a certain economic foundation, and their acceptance of cars at various price points is still not low, and they are not so sensitive to the purchase price of cars. According to the “Sunk Market Auto Consumption Trend Report” released by 58 same towns, 46.83% of consumers in the sinking market have intentions to purchase cars within the next year. Redemption and additional purchases have become the main demand for car purchases. The sum of the two accounts for 70. %.
Under the influence of the demand for car purchases, the demand for township users to view car information online is also rising. The survey data shows that 15% of township users will often browse car content, which is significantly higher than the proportion of users in first-tier and second-tier cities. As the largest automobile platform in China, Car House has many advantages, and it has reached good cooperation with many domestic automobile dealers. The car home has a great reference advantage in the types and price ranges of the cars it provides, and it is also attractive to township users.
Third, the policy of auto going to the countryside has been re-launched, which will further stimulate car purchase and consumption in rural and township areas. At present, the purchasing power of domestic first- and second-tier cities is close to the ceiling, and the government is also actively taking measures to stimulate the purchasing power of low-tier markets. At the beginning of 2019, the state once again issued favorable policies to promote rural automobile consumption. The “Policy” jointly issued by the National Development and Reform Commission and ten ministries and commissions stated that it will focus on supporting measures such as retirement and replacement of old cars, new energy subsidies, and replacement of rural cars.
With the support of policies and the support of subsidies, this series of actions can naturally drive the car purchase demand of township users. Especially for township users, there is no pressure on rent, and buying a car is not an economic burden. From this perspective, the low-line market is not only an important market for car brands to seize, it is also the focus of the future development of car homes. Seizing potential users in the low-end market will bring more growth momentum to the development of car homes.
Third, the advertising of car companies will continue to shrink Digital marketing in the automotive industry may usher in an explosion point
Under the influence of the epidemic, the operation of advertising marketing companies for intermediate service providers in various industries may also be affected. On the contrary, digital marketing companies have grown against the trend due to the outbreak of games and short videos during the Spring Festival. In recent years, the growth rate of the domestic advertising market has been declining continuously, and even negative growth has occurred. According to the “Review of China’s Advertising Market in the First Half of 2019” issued by CCTV Market Research Co., Ltd. (CTR), the overall advertising market in China in the first half of 2019 fell by 8.8%. 
Under the influence of the epidemic, in the first half of 2020, offline advertising companies may have to face a more severe situation. Under the premise that the advertising market is not ideal, what will happen to the digital marketing advertising market? Affected by the epidemic this time, the Internet industry was less affected, which also led to the development of the digital marketing advertising market. Taking the automotive industry as an example, the dealers moved their base camp from offline to online this time, which also allowed them to see the influence of digital marketing, which may drive the advertising business of automotive platforms in the future.
For car manufacturers, with limited advertising costs, the channels for advertising will become more cautious, but the digital marketing market is still likely to be an important channel for automotive advertisers. On the one hand, digital marketing is less affected by external factors, and on the other hand, it faces a more concentrated user group, which enables auto advertisers to see potential consumers. Although the advertising industry may be in recession this year, under the trend of online sales of cars, this is also likely to become an opportunity for new business development on platforms such as Autohome.
03. Effect of epidemic situation is still a short-term factor, Car sales are expected to usher in a small climax
This epidemic has put a lot of pressure on the auto industry, and car companies are also holding together to overcome difficulties. As an important cooperation platform for car dealers, Auto House also recently launched five major dealer support measures. From extending the exemption period, reducing the membership fee in February, to giving insurance to all employees of the dealer partners, etc., the loss of the dealer is reduced as much as possible. In addition to these measures, the technical services provided by Auto House also allow dealers to experience the necessity of digital transformation.
According to the big data of Auto House, as of February 9, more than 20,000 dealers have opened smart showroom services in Auto House. In this process, Auto House has played a significant role in helping companies to digitally transform.
With “big data + AI technology”, around the three core areas of sales, after-sales and customer service, build a three-dimensional service matrix such as software services, platform services, infrastructure services, and data services with Auto House, so that dealers We can calmly respond to various problems and needs of consumers online, and during the epidemic, dealers have seen the importance of digital transformation.
In the short term, the impact of the epidemic on the automotive industry is indeed not small, but after all, it was only a matter of time. After the outbreak, the automotive industry is calling on government authorities to provide industry-level policy support to meet the challenges posed by the outbreak. With the concerted efforts of enterprises and governments, it is not difficult to overcome the epidemic.
According to the data released by the China Automobile Association: feedback to the Association of 183 vehicle production basesOf the land, as of February 12, 59 bases have resumed work and production, accounting for 32.2%. Judging from this data, the resumption of work in the automotive industry is accelerating, which also means that the industry situation has changed from bad to good.
In terms of long-term development, the emergence of the new crown pneumonia epidemic may accelerate the optimization and adjustment of the industrial structure. Advantageous companies may obtain more market resources, which in turn plays a role in promoting the expansion and strength of advantageous enterprises. In the automotive industry, leading companies will quickly integrate resources and platforms after the epidemic, and gather more energy, material resources and manpower to develop. At this point, the advantages and strength of large companies will show strong resilience. .
In the future, with the end of the epidemic and the recovery of all things, various industries will also face new policy opportunities. The automotive industry will also receive relevant government policy support and consumption stimulation, and the industry will gradually pick up. Even after this outbreak, it may become a “catalyst” for users to purchase cars. During the epidemic, many people have realized the convenience and importance of cars, and may actively purchase cars after the epidemic, stimulating the sales of vehicles in the market. The car market ushers in a small climax of sales.
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As the world’s largest single-country automotive market, affected by this menacing epidemic, the domestic and foreign automotive industries have undergone a test. According to the “2020 Pneumonia Epidemic Impact Insight Report” published by Yiche.com, the domestic auto market has many difficulties. Affected by the epidemic, the trend of passenger cars in China in 2020 will be severely tested. Prevention and control efficiency.
From the perspective of the general environment, the impact of the epidemic on the automotive industry is not small, but car companies are actively taking measures to minimize the negative impact of the epidemic. Under the epidemic, some changes have taken place in the automotive industry.
I. Epidemic stimulates users’ first purchase demand. Online car retail model may welcome development opportunities
The rapid spread of new pneumonia this time, and the high contagion is an important factor. In view of the highly contagious nature of this epidemic, the importance of owning a private car in a special period can be imagined. According to the test of the car home, there are two important data reflecting the changes in users’ online viewing of cars, one is to see more people and the other is to watch more time.
During the epidemic period, PV per capita continued to increase, PV per capita increased by 25% after the holiday, and the length of stay per capita climbed, and user stickiness was higher, Per capita stay time after the holiday increased by 35%. At the same time, users are more favored by online VR to watch cars, but the decision-making cycle has become longer, from attention to clue investment on average extended by 0.9 days.
During the epidemic, the way users watch cars has also changed from offline to online. Car manufacturers have also launched “online car viewing” services, which include “zero-touch” forms such as live car viewing, online showrooms, and on-site test drives. Relatively speaking, the Internet car e-commerce platform that focuses on online car viewing is still more professional than car manufacturers, and the advantages of the platform represented by the car home are prominent. With certain car purchase requirements, online can also meet some of the user’s car viewing needs, from car brands, prices, evaluations and even VR car viewing experience.
In the long run, short-term user growth is expected to lead to consumer demand. With the help of big data, Car House can better understand user needs, thereby tapping the value of users. Why is there such a prediction? This is because in the post-SARS period, some people concluded that “reducing travel has stimulated three major consumptions: cars, bicycles, and online shopping.” With previous experience after SARS, these three major consumptions are also happening during this new coronary pneumonia.
It is foreseeable that the new retail model of automobiles, mainly based on online experience, car selection, and car purchase, will accelerate development. With the in-depth adjustment of supply and demand relationships, as well as Internet +, big data, AI technology, 5G communications, etc. The rapid development of technology, new retail of automobiles with digitalization, new channels and user experience as the key may become the development direction of automobile enterprises in the new environment.
Second, the low-line market has produced a “selling dammed lake”. After the epidemic, township users may welcome car purchases.
In the low-end market, data detected by Autohome shows that during the Spring Festival, active users in fourth to sixth tier cities increased by 19% year-on-year, and their share increased by 9.3%. As the purchasing power of cities gradually approaches saturation, the importance of growing purchasing power in rural areas will become apparent. The industry predicts that towns and rural areas will continue to be incremental markets in the next five years.
According to industry analysts, during the epidemic, the demand for car purchases by most users in sinking markets was suppressed, leading to the “damped lake” effect of car sales. Once the epidemic situation is over, the “damped lake” effect will quickly appear , The sinking market may usher in “purchase Xiaoyangchun”. Why does the sinking market bring huge growth momentum to the automotive industry? There are three reasons:
First, townspeople have the means to afford cars. According to the data of 58 city car reports in the same city, starting from 2018, rural residents’ income growth and consumer spending growth have been faster than urban residents. In the next few years, per capita disposable income of rural residents will begin to catch up with urban residents. The scale of income determines consumer behavior. At present, the economic pressure of township users on car purchases is not great.
Among them, the proportion of township users with monthly income of more than 8,000 yuan is close to the proportion of Chinese netizens ‘income structure, and the proportion of 5000-8000 yuan’s income is already higher than the proportion of Chinese netizens’ average income structure. The increase in income becomesTownship users are an important factor in car consumption. Under this premise, this will promote low-tier market car consumption to enter the fast track of growth.
Second, the largest proportion of township users are 30-35 years old, and they have a strong desire to buy a car. Users of this age group have a certain economic foundation, and their acceptance of cars at various price points is still not low, and they are not so sensitive to the purchase price of cars. According to the “Sunk Market Auto Consumption Trend Report” released by 58 same towns, 46.83% of consumers in the sinking market have intentions to purchase cars within the next year. Redemption and additional purchases have become the main demand for car purchases. The sum of the two accounts for 70. %.
Under the influence of the demand for car purchases, the demand for township users to view car information online is also rising. The survey data shows that 15% of township users will often browse car content, which is significantly higher than the proportion of users in first-tier and second-tier cities. As the largest automobile platform in China, Car House has many advantages, and it has reached good cooperation with many domestic automobile dealers. The car home has a great reference advantage in the types and price ranges of the cars it provides, and it is also attractive to township users.
Third, the policy of auto going to the countryside has been re-launched, which will further stimulate car purchase and consumption in rural and township areas. At present, the purchasing power of domestic first- and second-tier cities is close to the ceiling, and the government is also actively taking measures to stimulate the purchasing power of low-tier markets. At the beginning of 2019, the state once again issued favorable policies to promote rural automobile consumption. The “Policy” jointly issued by the National Development and Reform Commission and ten ministries and commissions stated that it will focus on supporting measures such as retirement and replacement of old cars, new energy subsidies, and replacement of rural cars.
With the support of policies and the support of subsidies, this series of actions can naturally drive the car purchase demand of township users. Especially for township users, there is no pressure on rent, and buying a car is not an economic burden. From this perspective, the low-line market is not only an important market for car brands to seize, it is also the focus of the future development of car homes. Seizing potential users in the low-end market will bring more growth momentum to the development of car homes.
Third, the advertising of car companies will continue to shrink Digital marketing in the automotive industry may usher in an explosion point
Under the influence of the epidemic, the operation of advertising marketing companies for intermediate service providers in various industries may also be affected. On the contrary, digital marketing companies have grown against the trend due to the outbreak of games and short videos during the Spring Festival. In recent years, the growth rate of the domestic advertising market has been declining continuously, and even negative growth has occurred. According to the “Review of China’s Advertising Market in the First Half of 2019” issued by CCTV Market Research Co., Ltd. (CTR), the overall advertising market in China in the first half of 2019 fell by 8.8%.
Under the influence of the epidemic, in the first half of 2020, offline advertising companies may have to face a more severe situation. Under the premise that the advertising market is not ideal, what will happen to the digital marketing advertising market? Affected by the epidemic this time, the Internet industry was less affected, which also led to the development of the digital marketing advertising market. Taking the automotive industry as an example, the dealers moved their base camp from offline to online this time, which also allowed them to see the influence of digital marketing, which may drive the advertising business of automotive platforms in the future.
For car manufacturers, with limited advertising costs, the channels for advertising will become more cautious, but the digital marketing market is still likely to be an important channel for automotive advertisers. On the one hand, digital marketing is less affected by external factors, and on the other hand, it faces a more concentrated user group, which enables auto advertisers to see potential consumers. Although the advertising industry may be in recession this year, under the trend of online sales of cars, this is also likely to become an opportunity for new business development on platforms such as Autohome.