Goldman Sachs downgraded Tuhu Car Inc. to Neutral, saying energy shocks and competitive pressure are limiting near-term margin visibility.

Overview

This report is Goldman Sachs' rating and earnings-forecast update for Chinese internet auto-platform and auto-aftermarket companies, focusing on Tuhu Car Inc. and Autohome Inc. It notes that Middle East tensions are driving crude oil prices near US$100 per barrel, and the Goldman Sachs energy team has also raised oil-price expectations. In a backdrop of high oil prices, slowing demand tied to traditional internal-combustion vehicles, intensified price competition, and continued increases in EV penetration, Goldman Sachs has become more cautious on revenue growth and margin recovery for the covered platforms.

Core views

The core view is that while Tuhu still has long-term advantages such as its store network, digital operations, standardized franchising model, and private-brand-led margin potential, near-term gross margin expansion visibility is limited. The company's more aggressive pricing strategy may help gain share but will reduce gross margins; rising raw material and commodity costs add further pressure. For Autohome, weaker traditional ICE-vehicle sales could reduce advertising and leads budgets from OEMs and dealers, leaving media and leads income still under pressure. Autohome Space may become a light-asset incremental business in the EV era, but its long-term profit contribution remains uncertain.

Analysis framework

The report combines top-down and bottom-up methods: starting from oil prices, ICE demand, EV penetration, and industry competition to assess changes in revenue and profit pools, then adjusting earnings forecasts using Tuhu 2H25 results, store expansion, user growth, gross margin movement, management guidance, and buyback activity, and finally updating the target price using a 12-month forward P/E framework. Autohome valuation is updated using a weighted framework of fundamental value and theoretical M&A value.

Methodology notes

• Valuation methods12-month forward P/E

  Tuhu target price is based on a 15x 12-month forward P/E.

  Goldman Sachs reduced Tuhu's target multiple from 16.5x to 15x and, together with lowered earnings estimates, reduced the 12-month target price from HK$20.6 to HK$15.0.

• Valuation methodsWeighted fundamental value and M&A value

  Autohome target price is composed of 85% fundamental value and 15% theoretical M&A value.

  Fundamental value uses an 11x target P/E multiplied by 2027 non-GAAP EPS, while M&A value uses a 15x 12-month forward target P/E.

• risk and scenarioOil price and EV penetration scenario analysis

  Changes in oil prices and EV penetration affect maintenance frequency, advertising spend, and the aftersales profit pool.

  Rising oil prices may reduce driving mileage and lengthen maintenance/replacement cycles; EV maintenance demand structure differs and may weaken traditional ICE aftersales revenue and profit pools in the medium term.

• factor frameworkGS Factor Profile

  Compares stock characteristics using growth, financial return, valuation multiple, and composite factors.

  This framework uses Goldman Sachs estimates and standardized ranking to compare the companies against the market and sector peers for relative positioning in investment judgment.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Tuhu Car Inc. (9690.HK)

  Primary covered name, rating downgraded from Buy to Neutral.

  Strengths

  The largest independent Chinese auto-aftermarket services platform, with integrated online-offline capabilities, standardized franchising model, store network expansion ability, supply-chain efficiency, and private-brand margin upside potential.

  Weaknesses

  Limited near-term gross margin visibility, intense price competition, share-gain promotion strategy that depresses margins, and additional pressure from rising raw material and goods costs.

  Comparison

  Relative to peers, Tuhu shows stronger user and store expansion, with 2025 same-store user growth outperforming the broader industry, but the stock has significantly underperformed the Hang Seng Index since being added to the Buy list in February 2024.

  Risks

  Higher oil prices can reduce mileage and extend service intervals, rising EV penetration may alter aftersales demand structure, and inability to pass through costs could further compress gross margins.

• Autohome Inc. (ATHM/2518.HK)

  Joint coverage name, rating maintained at Neutral.

  Strengths

  One of China's leading online auto service platforms with strong traffic, data, and shareholder return positioning; Autohome Space offers a light-asset retail monetization option in the EV era.

  Weaknesses

  Media advertising and leads revenue is sensitive to traditional ICE-vehicle sales and OEM/dealer budget cycles, leaving low visibility on income recovery.

  Comparison

  Compared with Tuhu, which is directly exposed to auto-aftermarket parts and service costs, Autohome is more directly exposed to OEM and dealer ad and leads budget cycles.

  Risks

  Media and leads revenue may decline more than expected, Autohome Space execution may miss expectations, shareholder return policy changes, management turnover, and M&A events may cause valuation volatility.

Key data

• Tuhu adjusted net profit forecast adjustment for 2026-2028Down about 20% on averagePrimarily driven by lower gross margin assumptions, share-gain promotion activity, and industry cost pressure.
• Tuhu target priceHK$15.0Previously HK$20.6, after a downgrade to Neutral.
• Tuhu 2H25 revenueabout RMB 8.6 billion, up 12% year-over-yearAbout 2% above GS estimate and about 1% above consensus.
• Tuhu 2H25 adjusted net profitRMB 290 million, up 9% year-over-yearBelow GS's 18% and below consensus 17%.
• Tuhu 2H25 gross margin23.1%Down 1.8 percentage points year-over-year and down 2.0 percentage points quarter-over-quarter, 1.9 percentage points below GS's estimate.
• Tuhu 2025 trading users28.4 million, up about 18% year-over-yearSame-store users were up 6% year-over-year, while industry-wide same-store users were down about 5%.
• Tuhu 2025 store countabout 8,000 storesNet new stores in 2025 were about 1,100, and management expects about 1,000 new stores in 2026.
• Tuhu new-energy-vehicle trading usersabout 4.3 million in 2025, up about 60% year-over-yearRepresents about 15% of total trading users and remains above the EV penetration in China's vehicle stock.
• Autohome estimate adjustmentRevenue down 3% and adjusted net profit down 6% on average for 2026-2028Mainly reflecting weaker ICE-vehicle sales and marketing budgets affecting media advertising and lead-generation revenue.
• Autohome target priceUS$18.7/HK$36.0Previously US$20/HK$39, rating maintained at Neutral.

Impact & implications

The investment implication is that auto-aftermarket platforms still retain long-term scale and digitalization advantages, but near-term investment focus is shifting from growth and margin expansion toward margin resilience, cost pass-through ability, and quality of share competition. For Tuhu, while market-share expansion, private brands, and higher-margin service growth are positives, the key question now is whether it can stabilize gross margins amid price competition and rising costs. For Autohome, traditional advertising and lead businesses remain exposed to ICE-market and OEM budget trends, and whether new EV-era retail monetization models in Autohome Space can be realized will be key to subsequent valuation recovery.

Risks

• Raw material and goods costs continue to rise, and the company may be unable to pass costs to consumers due to competitive pressure or share-expansion goals.
• Higher oil prices reduce per-vehicle mileage, extend maintenance and parts-replacement cycles, and lower aftersales transaction frequency.
• EV penetration rises faster than expected, shrinking the profit pools from traditional ICE-related aftersales and advertising.
• Price competition in the auto aftermarket intensifies, and ongoing promotions continue to drag down gross margin and net margin.
• Autohome's media advertising and leads revenue decline by more than expected.
• Spending on new EV-related businesses increases while benefits are below expectations.

What to watch

• Oil-price trend and its impact on mileage, maintenance frequency, and consumer behavior.
• Whether Tuhu's gross margin can stabilize or recover from the 2H25 level of 23.1%.
• Changes in Tuhu's store expansion pace, same-store user growth, and repurchase behavior.
• The ramp pace of Tuhu private brands, higher-margin service lines, and EV services.
• China EV orders, stock penetration, and the speed at which they substitute traditional ICE aftersales demand.
• Recovery in Autohome media advertising and leads revenue, and execution progress of Autohome Space.
• Continuity of buyback, dividend, and shareholder return policies at Tuhu and Autohome.