You might say that Autohome is in the driver's seat as the
leading online destination for automobile consumers in China.
Through its two websites, autohome.com and che168.com, it
leads the auto website market in China in all key metrics,
including daily users, page views and time spent online, the
company reports. In 2013,Autohome (
) accounted for about 47% of the total time that China's Internet
users spent viewing automotive information online, more than four
times that of its closest competitor. As of Sept. 30, it averaged
5.7 million daily users.
It's a good place to be. China is the world's largest car
market, as measured by sales volume of new automobiles. Carmakers
in China sold 21.98 million vehicles in 2013, up 14% from 2012,
according to the China Association of Automobile Manufacturers.
China also has the most Internet users by country -- 591 million
at the end of June 2013.
"Our mission is to engage, educate and inform auto consumers
with everything they need to know about buying, owning and
selling cars," Autohome CEO James Qin said on a conference call
with analysts after the company reported fourth quarter results
on Feb. 24.
How The Business Works
Autohome generates revenue through ads from automakers and
auto dealers, extending the reach of their physical showrooms to
millions of Internet users.
Revenue in the fourth quarter rose 74% to $63.8 million from
the year-ago quarter. The company reported earnings per share,
minus items, of 21 cents, both beating the consensus estimates of
Wall Street analysts. In 2013 revenue rose 66% to $201 million,
with net income of $75.3 million, up 114% from 2012. It reported
cash and equivalents of $188 million.
For the first quarter Autohome expects revenue between $52.5
million and $54.8 million, a rise of 55.6% to 62.5% from a year
Autohome became a publicly traded company in the U.S. on Dec.
11, raising $133 million by offering 7.8 million shares at $17,
above the upwardly revised range. The stock rose 77% on its first
day of trading.
"We are in the right place at the right time," Qin told IBD in
an interview that day. He said the online automotive advertising
market in China has achieved rapid growth as a result of the
development of China's automotive and Internet industries.
Chinese consumers are increasingly Internet-savvy, fueled partly
through the success of China Web portals such asSina (
) andSohu (
), he said.
These trends have enabled successful IPOs for other
China-based tech companies, such as online travel siteQunar (
) and online marketplace58.com (
) (profiled in The New America in December), further expanding
and enhancing China's Internet audience.
Qin, prior to joining Autohome in 2007, was chief operating
officer of 265.com, a website directory service that was acquired
by Google that year. He was previously employed by IBM and Hughes
Network Systems. He received a master's degree in computer
science from the University of Iowa in 1999 and an MBA from
Harvard Business School in 2005.
Deals With Dealers
Autohome reported having subscription services with 10,617
dealers at the end of the fourth quarter, up from 5,052 dealers
in 2012. The increase was due in part to Autohome's expansion
into new geographic markets and deeper penetration into existing
"Consumers in China mostly rely on the Internet for
auto-related information than any other medium," Qin said on the
Citing data from iResearch, Qin said less than 20% of the auto
advertising is being allocated to online media, compared with
about 40% in the U.S. market. That suggests Autohome has great
"Historically the U.S. has been a leading indicator of where
China goes in terms of online advertising," wrote Gene Munster,
analyst at Piper Jaffray, in a report on Autohome. "We believe
that Chinese online ad budgets have the potential to double."
Munster maintained a hold rating on Autohome and a price
target of 38.
Qin outlined four growth strategies for 2014. First, Autohome
will continue to expand its service to attract more ad dollars
from auto dealers.
Second, it will continue to push out its regional footprint,
including second-tier and third-tier markets, to gain market
Third, Autohome intends to increase its user base by expanding
its mobile product offerings.
Fourth, it plans to expand into the used car market, which is
still in the early stages in China.
Among rivals in the China market isBitAuto Holdings (BITA)
(profiled in The New America in October), which has a marketing
relationship with China's Internet search giantBaidu (BIDU). Qin
expects competition in the sector to be "furious."
On Monday, Goldman Sachs upgraded Autohome to neutral from
sell and upgraded its price target to 34 from 26.
"Similar toSouFun (SFUN), Autohome's leading traffic and
specialized content caters well to brand advertisers in the
underlying industry," analyst Piyush Mubayi wrote. "Its margin
profile is comparable to leaders in other verticals, reflecting
the website's organic traffic source and high quality
Autohome's largest shareholder is Telstra Holdings, a wholly
owned subsidiary of Telstra Corp., the leading telecommunications
company in Australia.