报告名称：Bitauto Holdings(BITA US)Transaction and auto finance support growth
报告类型：海外市场
报告日期：2016-03-09
研究机构：瑞银华宝国际证券有限公司
页数：13
简介：Auto finance will support volume growth and monetization of transaction
Despite prudent guidance on its advertising and subscription businesses in 2016, weexpect solid growth in auto transactions, in both C2B (Huimaiche) and B2C (Yiche Mall)services. We expect growth in C2B to be mainly driven by ARPU increase thanks to fullscale monetization, while growth in B2C to be driven by both volume and ARPU, whichwill be helped by the auto finance business, now more deeply integrated with YicheMall. We expect C2B and B2C sales volume of 200000 and 100000 units, withrespective ARPU of RMB1100 and RMB8000 (mainly driven by financial lease), andexpect total revenue contribution of RMB976mn, implying blended ARPU of RMB3253.We expect narrower loss in FY16E thanks to higher ARPU and larger business scale.
Q415 result takeaways: subscription business, one-off expenses
We are positive on 1) strong revenue and gross margin of subscription business (EP),thanks to more paying dealers, better monetization of transaction services andnarrowing discounts, 2) strong revenue growth in CIG, thanks to addition of new majorOEM customer, 3) strong Q116 revenue guidance. We are negative on 1) weakadvertising revenue, although partly explicable by high base in Q414 due to a one-offproject, 2) higher expenses in EP segment, particularly an asset write-down loss ofRMB281mn mostly related with the closedown of JD's Paipai business, 3) relativelyweak Q116 net profit guidance.
Estimate changes: cut earnings estimates on slower margin recovery
We raise revenue forecasts mainly to reflect change of accounting policy to US GAAP,which will book business taxes in revenue. We expect Ad/EP/Transaction revenue togrow 18%/28%/61% YoY (net of accounting changes) in FY16E. We cut marginforecasts due mainly to higher contribution of lower-margin EP/Transaction businesses.
Valuation: Maintain Buy with a new TP of US$61 (from US$67.30)
We remain bullish on BITA's business opportunities in the auto online transactionservices, and believe current share price is undervalued. Our TP is derived from DCF,and implies EV of US$4.0bn, FY16E/17E PE (non GAAP, fully diluted) of 28.7x/17.2x.This compares to our ATHM target EV of US$5.1bn and FY16E/17E PE (non GAAP, fullydiluted) of 31x/25x.

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