Autohome Inc. (ATHM) PT Lowered to $68 at HSBC on Increasing Competition and Industry Slowdown

HSBC analyst Ritchie Sun lowered the price target on Autohome Inc. (NYSE: ATHM) to $68.00 (from $75.00) after 2Q beat consensus but challenges from an industry slowdown and competition lead to a reduction in earnings estimates. Key factors include:

1) Traditional business: media services and leads generation revenue fell 36%/12% yoy as customers faced budget constraints. ATHM does not expect the chip shortage to ease until 4Q

2) New business: Online marketplace revenue grew 10% yoy, driven by data products revenue (+47% yoy) and contribution from TTP (cRMB150m)

3) Competition: ATHM’s mobile (app + mobile web + mini programs) DAU grew 14% to 44m in June. Mobile web contributes 60%+ of ATHM’s total mobile traffic and has outgrown app traffic, per Questmobile.

The analyst reiterated a Buy rating, stating "The market appears to assign a lower value to ATHM’s business than its cash (cash on balance sheet (USD2.8bn) is 55% of market cap). If ATHM missed our base case revenue and adjusted net margin in 2022e by 20%/2ppt, fair value would be USD27 on its historical trough 8x P/E. In the same scenario, but valued on the advertising peers average P/E of 18x, fair value would be USD58."

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